Enviva, the largest U.S. wood-pellet exporter, filed for bankruptcy Tuesday after a bad bet on future prices of the commodity triggered nine-figure losses, WSJ Pro Bankruptcy reported. The Bethesda, Md.-based company filed a chapter 11 petition in the U.S. Bankruptcy Court in Eastern Virginia. Enviva markets its wood pellets as a low-carbon alternative to fossil fuels. It began building its manufacturing plants and export network in 2010 with financing from energy-focused private-equity firm Riverstone. The company said last year that it had also been buying additional pellets and aiming to resell them for a profit, but that strategy backfired when pellet prices fell. Enviva was on the hook to pay $296.3 million for 800,000 metric tons of wood pellets that would only be worth $156.9 million on the open market, according to a November securities filing. The company also said at the time that it expected another $140 million in losses over the next two years based on the prices at the time for future deliveries of pellets. It had roughly $1.8 billion of debt as of last September.
In January, the company missed a $24 million interest payment owed to its bondholders. The Wall Street Journal reported last month that Enviva was preparing for bankruptcy and that certain bondholders had offered to provide financing for the chapter 11 proceedings.
