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Enviva ( EVA ) restructuring aims to cut $1 billion in debt

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Company seeks to renegotiate long-term biofuel contracts

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German energy co RWE says it is owed $349 million

By Dietrich Knauth

NEW YORK, March 14 (Reuters) - Bankrupt wood pellet

manufacturer Enviva Inc ( EVA ) plans to renegotiate long-term biofuel

supply agreements and resolve a $349 million contract dispute

with German energy company RWE in bankruptcy, lawyers for the

company said on Thursday.

Enviva ( EVA ) attorney David Meyer said at a court hearing in

Alexandria, Virginia, on Thursday that the company is building

support for a deal that will cut $1 billion in debt and make its

biofuel business more profitable in the long run. Those efforts

will lead Enviva ( EVA ) to terminate some contracts with energy

customers who have "refused to engage" in price reductions,

Meyer told U.S. Bankruptcy Judge Brian Kenney.

Enviva ( EVA ) filed for bankruptcy protection on Tuesday, saying

that it has struggled to maintain profitability due to increased

costs for converting raw wood fiber into pellets that can be

burned as biofuel by its energy customers. Enviva ( EVA ) has long-term

contracts with energy companies in the United Kingdom, the

European Union, and Japan, and some of those contracts have

locked in prices that are no longer profitable for Enviva ( EVA ), the

company said.

Enviva ( EVA ) intends to finance is bankruptcy with a $500 million

loan from its existing lender group.

In addition to its contract renegotiations, Enviva ( EVA ) is

working to resolve a dispute with RWE, a German energy company

that says it is owed $349 million from Enviva's ( EVA ) ill-fated effort

to lock in future pricing for wood pellets that Enviva ( EVA ) intended

to sell to other customers.

Enviva ( EVA ) agreed in 2022 to buy large quantities of raw

material from RWE, but it terminated the deal early after

material prices fell far below the amount it had agreed to pay,

according to court documents.

RWE's attorney, Lisa Laukitis, said that Enviva ( EVA ) seems to be

trying to wipe out the $349 million contract claim in exchange

for a "minimal" equity stake in Enviva ( EVA ). RWE intends to

"scrutinize" hundreds of millions of dollars in dividends that

the company paid to shareholders before it went bankrupt, as a

potential source of repayment for creditors, Laukitis said.

Laukitis and Meyer both told Kenney that their clients would

negotiate to try to resolve the dispute.

Headquartered in Bethesda, Maryland, Enviva ( EVA ) is the world's

largest producer of wood pellet biofuel, with 1,200 employees

and 10 wood-pellet production plants located in Virginia, North

Carolina, South Carolina, Georgia, Florida, and Mississippi,

according to its court filings.

The case is In re Enviva Inc. ( EVA ), U.S. Bankruptcy Court for the

Eastern District of Virginia, No. 24-10453.

For Enviva ( EVA ): David Meyer of Vinson & Elkins, among others

For RWE: Lisa Laukitis of Skadden, Arps, Slate, Meagher &

Flom

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