Enviva Partners, LP (NYSE:EVA) announced today the pricing of its private placement to eligible purchasers of $300 million in aggregate principal amount of 8.500% senior unsecured notes due 2021 at par. The offering is expected to close on November 1, 2016, subject to customary closing conditions.
The Partnership estimates that it will receive net proceeds of approximately $293 million, after deducting the initial purchasers’ discounts and estimated expenses. The gross proceeds from the offering will be deposited into an escrow account pending completion of the proposed acquisition of the entity which owns a wood pellet production plant in Sampson County, North Carolina, a ten-year, 420,000 metric ton per year (“MTPY”) off-take contract with an affiliate of DONG Energy, a 15-year 95,000 MTPY off-take contract with a joint venture between our sponsor and affiliates of John Hancock Life Insurance Company, and a third-party shipping contract (collectively, the “Sampson Acquisition”).
If the Sampson Acquisition is completed, we expect to use a portion of the net proceeds from the offering, together with cash on hand and net proceeds or other consideration from any issuances of additional equity, to fund the consideration payable by us in connection with the Sampson Acquisition. The remainder of the net proceeds from the offering will be used to repay certain outstanding term loan indebtedness under our credit facilities. We are considering the issuance of up to approximately $30 million of equity in connection with the Sampson Acquisition, potentially under our existing at-the-market equity offering, as partial consideration for the Sampson Acquisition, or by other methods. Any such offering will be subject to market conditions and may not be consummated in advance of the Sampson Acquisition or at all. This offering of the notes, and the release of the proceeds from escrow in connection with the closing of the Transactions, is not conditioned on any such equity offering.
Although we expect to enter into a definitive agreement in respect of the Sampson Acquisition, there can be no assurance that the Sampson Acquisition will be completed. If the Sampson Acquisition is not completed on or prior to January 31, 2017, or if we earlier determine that the escrow release conditions will not be met on or prior to January 31, 2017, the notes will be subject to special mandatory redemption at a redemption price payable in cash equal to 100.0% of the initial issue price of the notes, plus accrued and unpaid interest to the mandatory redemption date.
The notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any other jurisdiction. Unless they are registered, the notes may be offered only in transactions that are exempt from registration under the Securities Act and applicable state securities laws. The notes are offered only to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S of the Securities Act. The notes will not be listed on any securities exchange or automated quotation system.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering may be made only by means of an offering memorandum.
About Enviva Partners, LP
Enviva Partners, LP (NYSE:EVA) is a publicly traded master limited partnership that aggregates a natural resource, wood fiber, and processes it into a transportable form, wood pellets. The Partnership sells a significant majority of its wood pellets through long-term, take-or-pay agreements with creditworthy customers in the United Kingdom and Europe. The Partnership owns and operates six plants in Southampton County, Virginia; Northampton County and Ahoskie, North Carolina; Amory and Wiggins, Mississippi; and Cottondale, Florida. We have a combined production capacity of approximately 2.3 million metric tons 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.