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Supplier With Wilmington Port Facility Faces More Financial Headwinds

By Audrey Elsberry, posted Jan 30, 2024
Large wood pellet supplier with a shipment point at the Port of Wilmington, Enviva, faces latest financial warning this week. (Photo courtesy of Enviva)
Enviva, a supplier of wood pellets used for energy generation with a presence at the Port of Wilmington, announced Monday it could get knocked off the New York Stock Exchange.

The company is the largest wood pellet supplier to power major generators in the world. With 10 plants across the Southeast, Enviva has leased a storage facility and terminal at the Port of Wilmington since 2016, according to Enviva’s website. In recent months the company has undergone significant financial losses and criticism on its environmental claims.

On Monday, the company filed a report with the Securities and Exchange Commission disclosing that the New York Stock Exchange has notified the publicly traded company (NYSE:EVA) that it is no longer in compliance with NYSE listing criteria. The company’s stock price fell below $1 for 30 consecutive trading days as of Jan. 23, according to the company filing.

Enviva’s stock price sat at $0.51 as of publication time. NYSE’s notice does not affect the company’s business operations; however, if the stock price does not exceed $1 by the end of the last trading day after a six-month “cure” period, the NYSE could delist the common stock, according to the company filing.

“Enviva is a long-standing tenant of the Port of Wilmington and remains current on all their payments,” said Elly Cosgrove, communications manager of the North Carolina Ports Authority.

Enviva officials did not respond to comment as of publication time. 

On Jan. 19, global credit-rating agency, Fitch Ratings, downgraded the company’s loan default rating from CCC-, or substantial credit risk, to C, or near default. The downgrade was sparked by the failure of the company to fulfill a $24.4 million payment on Jan. 16 on its $750 million senior notes due by 2026, according to a Fitch Ratings release.

The rating agency also cited the company’s “worsening operating losses” after its third-quarter earnings release in November, which reported a net loss of $85.2 million. A further downgrade in credit rating to RD, or restricted default, is likely, according to the report. The credit analysts at Fitch added they expect the company to run out of available cash by next year.

The Port of Wilmington serves as the company’s shipment point for its Sampson and Hamlet plants. The Wilmington terminal receives shipments by rail, truck or sea. Its storage facility at the port consists of two domes that house up to 45,000 metric tons of wood pellets, according to Enviva’s website.

If Enviva’s stock is delisted from the NYSE, it will trade over the counter instead, through a dealer network. Shareholders can still buy and trade the stock, but trading over the counter tends to have the connotation that a company is close to, if not already, bankrupt, according to Seeking Alpha. It is rare that a delisted stock gets relisted to a major exchange.

The financial troubles of the wood pellet supplier stem from the contracts it currently has with customers.

“Using such volumed to satisfy delivery obligations under such contracts would not cover our loss on the purchases under the Q4 2022 Transactions,” Enviva’s third-quarter earnings filings read, “and would have a negative impact on our profitability, cash flows, and liquidity.”

The company recently hired a new chief operating officer, Mark Coscio, to renegotiate existing contracts with customers, according to the Fitch report, as well as promoted the former CFO, Glenn Nunziata to interim CEO.

A class action lawsuit was filed in the U.S. District Court of Maryland against the company in 2022 for its environmental and financial claims. Stockholders accused the company of misrepresenting the environmental effects of the production and procurement of its wood pellets, as well as overstating the true measure of cash flow, according to court documents.
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