Insolvency administrator sells 3 German Pellets’ plants

By Erin Voegele | May 10, 2016

The law firm of an attorney serving as insolvency administrator to German Pellets GmbH has released a statement noting three of the company’s pellet plants in Germany have been sold, with negotiations ongoing in the sale of a fourth.

According to the statement, a district court in Schwerin, Germany, opened the insolvency proceedings over the assets of German Pellets on May 1 and appointed Bettina Schmudde, an attorney and partner with law firm White & Case, as insolvency administrator. On the same day, Schmudde closed several contracts with investors, which ensure the continuation of significant parts of the German Pellets group. The company began insolvency proceedings earlier this year.  

The Wismar, Germany, site will be taken over by Metropolitan Equity Partners Management LLC, a New York-based financial advisory firm that has extensive experience in the development of companies. The facility is now known as Wismar Pellets GmbH. According to German Pellets’ website, the 256,000-ton-per-year plant was built in 2005. It produces pellets to serve the market in northern Germany, and also ships product to power plants in Scandinavia.

Paul Lisiak, managing partner from MEP, said, “We are happy to facilitate an end to a challenging chapter of the wood pellet industry in Germany. MEP and our new management team are dedicated to lead the Wismar plant back to its original promise and capabilities.”

MEP Director Doug Jacobsen, who is in charge of managing the investment for MEP, added, “We look forward to the opportunity to re-establish the organic synergies with local business partners in Wismar and the greater Mecklenburg-Vorpommern region. There is a long history for the wood industry in the local area and we expect to drive new growth and build lasting success. Our decision to rebrand the company as Wismar Pellets underlines our dedication to this goal.”

The Ettenheim and Herbrechtingen, Germany, plants will be taken over by German-based J. Rettenmaier & Söhne GmbH + Co KG, a global pulp producer. The 128,000-ton-per-year Ettenheim plant began operations in 2006 and supplies pellets to customers in southern Germany, Switzerland and France. The 256,000-ton-per-year Herbrechtingen plant also began operations in 2006 and serves markets in southern Germany, Austria and Italy.

Josef Otto Rettenmaier, CEO of JRS, said, “Of course our goal must be to preserve the jobs and get the plants up and running again despite the difficult market environment.”

According to information released by White & Case, manufacturing jobs will be preserved at all three plants. However, there will be adjustments made to administrative staff at the Wismar facility.

"With these transaction agreements we were able to ensure a long-term perspective for businesses at three locations of the German Pellets Group," Schmudde said. “The closing of these contracts is subject to several conditions. Until then, the businesses will continue under the direction of the insolvency administrator on an interim basis.”

According to the statement, negotiations are currently ongoing regarding the sale of the Torgau, Germany, plant. “Here we are discussing with various interested parties,” Schmudde explained, noting an agreement is expected before the end of May. The 150-000-ton-per-year Torgau plant began operations in 2009 and produces DINplus and industrial pellets.

Regarding German Pellets’ U.S. pellet plants in Texas and Louisiana, the statement notes insolvency proceedings are continuing under Chapter 11 bankruptcy. According to the statement, German Pellets team will continue to push forward with the pellet projects in the U.S. on the insolvency administrator’s behalf. Together with the lawyers of the U.S. investors who invested approximately $550 million in those companies, “they are working on sustainable restructuring and continuation solutions.”