Enviva Partners agreed to purchase Enviva Port of Wilmington from Enviva Wilmington Holdings (Hancock JV), a joint venture between the company’s sponsor and affiliates of John Hancock Life Insurance Company, for total consideration of USD 130 million comprised of two payments. The acquisition is expected to close on or about October 2, 2017.
Wilmington owns a fully operational deep-water marine terminal in Wilmington, North Carolina, USA. The terminal utilizes state-of-the-art handling equipment and storage infrastructure designed to maintain product quality and safety with throughput capacity of up to 3Mtpa of wood pellets. The terminal is capable of receiving product by rail and truck, storing up to 90,000 metric tons of wood pellets, and loading up to panamax-sized vessels. Wilmington is party to long-term terminal services agreements to receive, store, and load a total of approximately 1Mtpa of wood pellets from the Enviva Partners’ production plant in Sampson County, North Carolina and a third-party production plant for the Enviva’s sponsor, subject to deficiency payments if minimum throughput requirements are not met.
In addition, Wilmington is party to a long-term terminal services agreement with the Hancock JV to receive, store, and load wood pellets from the Hancock JV’s planned production plant in Hamlet, North Carolina. Wilmington’s terminal services agreement for production from the Hamlet plant is also subject to deficiency payments if minimum throughput requirements are not met.
Production from the Hamlet plant is expected to supply MGT Power’s Teesside Renewable Energy Plant, which is currently under construction in the UK. When the Hamlet plant commences operations, Enviva expects the incremental adjusted EBITDA from Wilmington to increase to USD 14 million and to reach USD16 million per year once the Hamlet plant reaches its expected full production rate of 600ktpa.
According to the announcement, the partnership will make an initial payment of USD 56 million for Wilmington at closing. Upon the acquisition of Wilmington, it initially expects to generate incremental adjusted EBITDA of approximately USD 5 million for 2018 and run-rate incremental adjusted EBITDA of approximately USD8 million in 2019. The partnership expects to fund the initial purchase price with borrowings under its revolving credit facility. Upon first deliveries to the Wilmington terminal from the Hamlet plant, the partnership will make another payment of USD 74 million, subject to certain conditions.
Earlier Enviva completed the previously announced acquisition of the Sampson plant and associated off-take contracts from Enviva Holdings joint venture with affiliates of John Hancock Life Insurance Company.
About Enviva Partners:
The company is a publicly traded master limited partnership that aggregates a natural resource, wood fiber, and processes it into a transportable form, wood pellets. It sells a significant majority of its wood pellets through long-term, take-or-pay agreements with creditworthy customers in the U.K. and Europe. Enviva Partners owns and operates six plants in Southampton County, Virginia; Northampton County and Ahoskie, North Carolina; Amory and Wiggins, Mississippi; and Cottondale, Florida having a combined production capacity of approximately 2.3 Mt of wood pellets per year. In addition, the partnership owns a deep-water marine terminal at the Port of Chesapeake, Virginia, which is used to export wood pellets. Enviva Partners also exports pellets through the ports of Mobile, Alabama and Panama City, Florida.