Enviva Partners, LP Announces Accretive Drop-Down Transactions and Increases Guidance

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BETHESDA, Md. -- Enviva Partners, LP (NYSE: EVA) (“Enviva,” the “Partnership,” “we,” “us,” or “our”) today announced that it had agreed to purchase (the “Hamlet Transaction”) the sponsor’s interest in its first development joint venture, Enviva Wilmington Holdings, LLC (the “First JV”).

The First JV owns a wood pellet production plant under construction in Hamlet, North Carolina (the “Hamlet plant”) and a firm, 15-year take-or-pay off-take contract (the “MGT contract”) to supply MGT Power Ltd.’s Tees Renewable Energy Plant with nearly one million metric tons per year (“MTPY”) of wood pellets, following a ramp period. In addition, the Partnership announced that it has agreed to make the second and final payment (the “Second Payment”) for its October 2017 acquisition of the deep-water marine terminal in Wilmington, North Carolina (the “Wilmington terminal”) and to commence the associated terminal services agreement to handle contracted volumes from the Hamlet plant (the “Hamlet Throughput”).

Highlights:

  • The Hamlet Transaction is expected to generate net income in the range of $10.4 million to $13.4 million and adjusted EBITDA in the range of $26.0 million to $29.0 million once the Hamlet plant and the MGT contract are fully ramped.
  • With the Hamlet Transaction and the Hamlet Throughput, the Partnership expects full-year 2019 net income to be in the range of $25.6 million to $33.6 million, adjusted EBITDA to be in the range of $130.0 million to $138.0 million, and distributable cash flow to be in the range of $92.0 million to $100.0 million, prior to any distributions attributable to incentive distribution rights paid to our general partner.
  • The Hamlet Transaction and Hamlet Throughput associated with the Second Payment are expected to be immediately accretive to distributable cash flow per common unit; as a result, the Partnership now expects to distribute at least $2.65 per common unit for full-year 2019 and between $2.87 and $2.97 per common unit for full-year 2020.
  • The Partnership has agreed to issue approximately $200.0 million in common units, which, when combined with borrowings under its existing $350.0 million senior secured revolving credit facility, would fully finance the Hamlet Transaction, the Second Payment, and the previously announced production capacity expansions at the Partnership’s Northampton and Southampton production plants.
  • The Partnership revised its annual target distribution coverage ratio from 1.15 to 1.20 times, on a forward basis.

“We’re very excited that, with the transactions announced today, we expect to be able to deliver double-digit annual distribution growth, along with higher coverage levels, for the foreseeable future,” said John Keppler, Chairman and Chief Executive Officer of Enviva. “Our sponsor intends to recycle the proceeds it receives from these transactions into the build-out of the Pascagoula cluster, which we believe further enhances the long-term growth profile of the Partnership, as we expect to have the opportunity to acquire these assets.”

Link to press release

Source: Enviva

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