Enviva Partners, LP has acquired the fully-contracted Southampton plant from its sponsor’s joint venture with affiliates of John Hancock Life Insurance Company.
The acquisition includes the fully operational 510,000 metric tons per year (“MTPY”) wood pellet production plant in Southampton County, Virginia, a ten-year 500,000 MTPY take-or-pay off-take contract (385,000 metric tons in the first year), and a matching ten-year shipping contract (collectively, the “Southampton Drop-down”).
“We are excited to announce our first drop-down transaction with our sponsor. The fully-contracted Southampton plant is a world-class facility that fits seamlessly into our core business and will significantly increase our production capacity and the tenor of our contracted cash flows,” said John Keppler, Chairman and CEO. “The acquisition, which is expected to be immediately accretive to the Partnership’s distributable cash flow per unit, provides the opportunity to substantially increase our distribution while still maintaining conservative coverage ratios.”
The $131 million purchase price for the Southampton Drop-down was financed with $36.5 million in debt, $15 million in equity issued to the Partnership’s sponsor, and cash on hand. The debt was raised under the Partnership’s existing credit agreement on the same terms and conditions as the existing facilities.
Enviva Partners, LP is a publicly traded master limited partnership that aggregates a natural resource, wood fiber, and processes it into a transportable form, wood pellets.