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Enviva Partners, LP acquires Wilmington terminal drop-down

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Dry Bulk,

Enviva Partners, LP has completed the previously announced acquisition of Enviva Port of Wilmington, LLC from Enviva Wilmington Holdings, LLC, a joint venture between its sponsor and affiliates of John Hancock Life Insurance company.

“We are pleased to announce the completion of the Wilmington terminal acquisition, our third drop-down transaction since our IPO,” said John Keppler, Chairman and Chief Executive Officer. “This acquisition adds a strategically located asset that complements our existing portfolio of plants and ports. Ownership and control over deep-water, dry bulk terminaling and storage facilities like the Wilmington terminal, the scarcest portion of our industry’s value chain, is a key part of our long-term growth strategy.”

Wilmington terminal drop-down

Wilmington owns a fully operational deepwater marine terminal in Wilmington, North Carolina. The Wilmington terminal is capable of receiving product by rail and truck, storing up to 90 000 t of wood pellets, and loading up to panamax-sized vessels. It uses state-of-the-art handling equipment and storage infrastructure designed to maintain product quality and safety with throughput capacity of up to 3.0 million tpy of wood pellets.

Wilmington will handle up to approximately 600 000 tpy of throughput volume from the Partnership’s production plant in Sampson County, North Carolina and is party to a long-term terminal services agreement with our sponsor to handle throughput volumes sourced by our sponsor from a third-party production plant. The terminal services agreement with our sponsor is subject to deficiency payments if minimum throughput requirements are not met. In addition, the Wilmington terminal is expected to receive, store, and load wood pellets from the Hancock JV’s planned production plant in Hamlet, North Carolina. Upon completion of the Hamlet plant, a terminal services agreement between Wilmington and the Hancock JV is expected to provide for deficiency payments if minimum throughput requirements from the Hamlet plant are not met.

The Partnership previously agreed to purchase Wilmington from the Hancock JV for total consideration of US$130.0 million pursuant to a contribution agreement between the Partnership and the Hancock JV (the 'Wilmington Contribution Agreement'). Today, the Partnership made an initial payment of US$56.0 million, adjusted in accordance with the terms of the Wilmington Contribution Agreement for estimated working capital at the time of the closing, which was funded with borrowings under the Partnership’s revolving credit facility and cash on hand. In addition, upon first deliveries to the Wilmington terminal from the Hamlet plant, the Partnership will make another payment of US$74.0 million to the Hancock JV, subject to certain conditions.

Evercore served as exclusive financial advisor and Andrews Kurth Kenyon LLP served as legal counsel to the conflicts committee of the board of directors of the Partnership’s general partner. Vinson & Elkins LLP served as legal counsel to the Hancock JV.

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