Enviva's borrowing announcement shows banking industry confidence
If Enviva LP’s recent announcement is any indication of the wood pellet industry’s standing with the banking industry, then pellet producers and suppliers should be enthused. The pellet producer and global biomass supplier has closed on a $120 million senior secured credit facility (loan) that will help complete the construction of two 500,000 metric ton pellet mills, and expand the company’s deep-water port terminal in Virginia to 100,000 metric tons. Steve Reeves, executive vice president and CFO for the company said that the corporate borrowing is one of the first credit underwritings in the biomass industry. “We’re delighted by the strong show of confidence from leaders in the banking industry,” Reeves said.
“The confidence that is showed by the banks in this indicates that Enviva has reached a point of maturity and reliability where the banks feel that their investments [in biomass] are certainly sound,” Woodworth said.
Woodworth credits the combination of Enviva’s track record of producing and supplying reliable, sustainable and quality products with the fact that the company has already formed several long-term contracts with creditworthy customers as the main reason for the banking industry’s confidence in Enviva.
Barclays Bank PLC, Goldman Sachs Bank USA, Royal Bank of Canada and Citigroup Global Markets Inc., served as the joint lead arrangers and joint book runners on the deal. By 2013, the company will have 1.72 million metric tons of annual biomass capacity to supply its European utility customer base. John Keppler, chairman and CEO of Enviva, said that as demand for sustainable biomass grows, the midstream supply sector must grow. “Enviva and the broader midstream sector are a crucial part of global renewable energy infrastructure. Debt capital alongside the equity capital we and our principal financial sponsor, Riverstone Holdings LLC, have invested and continue to invest is an essential part of funding our growth,” Keppler said.
Based on the recent corporate borrowing announcement and the company’s long term contracts for 2013 and beyond, Woodworth said 2013 will be an exceptional year for the company. “We are very optimistic about this industry,” she said.