Enviva Partners, LP (NYSE:EVA) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Contribution Agreement
On May8, 2017, Enviva Partners, LP, a Delaware limited
partnership (the Partnership) and a subsidiary of Enviva
Holdings, LP, a Delaware limited partnership (Enviva Holdings),
entered into a contribution agreement (the Contribution
Agreement) with Enviva Wilmington Holdings, LLC, a Delaware
limited liability company (the Hancock JV) that is a joint
venture between Enviva Holdings, Hancock Natural Resource
Group,Inc. and certain other affiliates of John Hancock Life
Insurance Company (U.S.A.). to the Contribution Agreement, the
Hancock JV will indirectly contribute to Enviva, LP, a Delaware
limited partnership and a wholly owned subsidiary of the
Partnership, all of the issued and outstanding limited liability
company interests (the Contributed Interests) in Enviva Port of
Wilmington, LLC, a Delaware limited liability company
(Wilmington), for total consideration of (i)$56.0 million (the
Closing Purchase Price), subject to certain adjustments, and
(ii)the Deferred Purchase Price (as described below).We refer to
this acquisition herein as the Wilmington Drop-Down.
Wilmington owns a fully operational deep-water marine terminal in
Wilmington, North Carolina (the Wilmington terminal) and is party
to long-term terminal services agreements to receive, store, and
load a total of approximately 1.0 million metric tons per year of
wood pellets from the Partnerships production plant in Sampson
County, North Carolina (the Sampson plant) and a third-party
production plant that produces wood pellets for Enviva Holdings.
Wilmingtons terminal services agreement for production from the
third-party production plant provides for deficiency payments if
minimum throughput requirements are not met.
The composition of the Closing Purchase Price between cash and
common units representing limited partner interests in the
Partnership (common units) will be mutually agreed by the parties
to the Contribution Agreement and approved by the conflicts
committee of the board of directors of Enviva Partners GP, LLC, a
Delaware limited liability company and the general partner of the
Partnership (the General Partner), composed of independent
members of the board of directors of the General Partner (the
Conflicts Committee), at least three business days prior to the
date of the closing of the Wilmington Drop-Down. In the event the
parties to the Contribution Agreement and the Conflicts Committee
are unable to agree on the composition of the Closing Purchase
Price between cash and common units by such time, the Closing
Purchase Price will be paid solely in cash.
In addition, the Contribution Agreement contemplates that
Wilmington will enter into a long-term terminal services
agreement (the Wilmington Hamlet TSA) with the Hancock JV and
Enviva Pellets Hamlet, LLC, a Delaware limited liability company
and wholly owned subsidiary of the Hancock JV (Hamlet), to
receive, store, and load wood pellets from Hamlets proposed
production plant in Hamlet, North Carolina (the Hamlet plant).
The Wilmington Hamlet TSA also provides for deficiency payments
if minimum throughput requirements are not met. to the
Contribution Agreement, following notice of the anticipated first
delivery of wood pellets to the Wilmington terminal from the
Hamlet plant, Hamlet and the Hancock JV will enter into the
Wilmington Hamlet TSA and the Partnership will make another
payment of $74.0 million (the Deferred Purchase Price) to the
Hancock JV consisting of cash and common units, subject to
certain adjustments, as partial, deferred consideration for the
contribution of the Contributed Interests. The composition of the
Deferred Purchase Price between cash and common units will be as
mutually agreed upon in the same manner as the Closing Purchase
Price.
Each of the parties to the Contribution Agreement is an indirect
subsidiary of Enviva Holdings.As a result, certain individuals,
including officers and directors of Enviva Holdings GP, LLC, a
Delaware limited liability company and the general partner of
Enviva Holdings, and officers and directors of the General
Partner, serve as officers and/or directors of one or more of
such entities.As of the date of this Current Report on Form8-K
(this Current Report), Enviva Holdings indirectly owns 1,347,161
common units and 11,905,138 subordinated units representing
limited partner interests in the Partnership (subordinated
units), collectively representing a 50.4% limited partner
interest in the Partnership based on the number of common units
and subordinated units outstanding.Through its control and
ownership of the General Partner, Enviva Holdings also owns the
general partner interest in the Partnership and all of the
Partnerships incentive distribution rights.
The Conflicts Committee retained legal and financial advisors
to assist it in evaluating and negotiating the Contribution
Agreement.In approving the terms of the Contribution Agreement,
the Conflicts Committee based its decision in part on an
opinion from its independent financial advisor that the
consideration to be paid by the Partnership in exchange for the
Contributed Interests is fair, from a financial point of view,
to the Partnership and holders of common units, other than the
General Partner, the Hancock JV and their respective
affiliates.
The Contribution Agreement has customary representations and
warranties regarding the Wilmington Drop-Down, as well as
customary covenants and indemnity provisions. The consummation
of the Wilmington Drop-Down is subject to the satisfaction of
customary closing conditions, including, among other things,
the absence of legal impediments prohibiting the consummation
of the Wilmington Drop-Down, the performance by the parties, in
all material respects, of their respective covenants as set
forth in the Contribution Agreement and, subject to certain
exceptions, the accuracy of their respective representations
and warranties as set forth in the Contribution Agreement.
There is no assurance that all of the conditions to the
consummation of the Wilmington Drop-Down will be satisfied. The
Partnership currently expects the Wilmington Drop-Down to close
on or about October2, 2017 (the Closing) and the first delivery
of wood pellets to the Wilmington terminal from the proposed
Hamlet plant to be made in late 2018.
The Contribution Agreement provides for certain limited rights
to terminate the Contribution Agreement, including if the
Closing has not occurred by December31, 2017.
The foregoing description is not complete and is subject to and
qualified in its entirety by reference to the full text of the
Contribution Agreement, which is filed as Exhibit2.1 to this
Current Report and incorporated herein by reference. The
representations and warranties in the Contribution Agreement
are made solely for the benefit of the parties thereto. The
assertions embodied in such representations and warranties are
qualified by information contained in disclosure schedules that
the parties exchanged in connection with the signing of the
Contribution Agreement. In addition, these representations and
warranties (i)may be intended not as statements of fact, but
rather as a way of allocating risk to one of the parties if
those statements prove to be inaccurate, (ii)may apply
materiality standards different from what may be viewed as
material to investors and (iii)were made only as of the date of
the Contribution Agreement or as of such other date or dates as
may be specified in the Contribution Agreement. Moreover,
information concerning the subject matter of such
representations and warranties may change after the date of the
Contribution Agreement, which subsequent information may or may
not be fully reflected in the Partnerships public disclosures.
Investors are urged not to rely on such representations and
warranties as characterizations of the actual state of facts or
circumstances at this time or any other time.
Item 3.02. Unregistered Sales of Equity
Securities.
The information included in Item 1.01 of this Current Report is
incorporated by reference into this Item 3.02.
Cautionary Statement on Forward-Looking
Statements
This Current Report includes forward-looking statements within
the meaning of federal securities laws. Such forward-looking
statements are subject to a number of risks and uncertainties,
many of which are beyond the Partnerships control. All
statements, other than historical facts included in this
Current Report, are forward-looking statements. All
forward-looking statements speak only as of the date of this
Current Report. Although the Partnership believes that the
plans, intentions and expectations reflected in or suggested by
the forward-looking statements are reasonable, there is no
assurance that these plans, intentions or expectations will be
achieved. Therefore, actual outcomes and results could
materially differ from what is expressed, implied or forecast
in such statements.
Item 9.01. Financial Statements and Exhibits.
Exhibits.
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Exhibit Number |
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Description |
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2.1 |
Contribution Agreement by and between Enviva Wilmington |
* Schedules and exhibits have been omitted to Item 601(b)(2)of
Regulation S-K. The Partnership hereby undertakes to furnish
supplemental copies of any of the omitted schedules or exhibits
upon request by the U.S. Securities and Exchange Commission.
to the requirements of the Securities Exchange Act of 1934, as
amended , the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
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ENVIVA PARTNERS, LP |
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By: Enviva Partners GP, LLC, its general partner |
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Date: May12, 2017 |
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By: |
/s/ William H. Schmidt,Jr. |
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Name: |
William H. Schmidt,Jr. |
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Title: |
Executive Vice President, General Counsel and Secretary |
INDEX TO EXHIBITS
|
Exhibit Number |
|
Description |
|
2.1 |
Contribution Agreement by and between Enviva Wilmington |
* Schedules and exhibits have been omitted
About Enviva Partners, LP (NYSE:EVA)
Enviva Partners, LP is a producer of wood pellets. The Company, through its interests in Enviva, LP and Enviva GP, LLC, supplies utility-grade wood pellets to power generators under long-term, take-or-pay off-take contracts. The Company procures wood fiber and processes it into utility-grade wood pellets. The Company loads the finished wood pellets into railcars, trucks and barges that are transported to deep-water marine terminals, where they are received, stored and ultimately loaded onto oceangoing vessels for transport to its Northern European customers. The Company owns and operates approximately six production plants in the Southeastern United States that have a combined wood pellet production capacity of approximately 2.3 million metric tons per year (MTPY). Wood pellets are exported from a deep-water marine terminal in Chesapeake, Virginia and from third-party deep-water marine terminals in Mobile, Alabama and Panama City, Florida under long-term contracts. Enviva Partners, LP (NYSE:EVA) Recent Trading Information
Enviva Partners, LP (NYSE:EVA) closed its last trading session 00.00 at 28.40 with 50,627 shares trading hands.
