Wood pellet giant Enviva, which has a big footprint in Eastern N.C., files for bankruptcy

After months of economic uncertainty, the world's biggest wood-to-energy company with a significant economic footprint in Eastern North Carolina has filed for bankruptcy.

Late Tuesday, Enviva announced it had reached agreements with some of its biggest creditors to significantly reduce its debt, a move that required the company to enter Chapter 11 bankruptcy.

“These agreements with our lenders and noteholders represent a significant milestone in the ongoing process to transform our business, as we focus on improving profitability, reducing costs, enhancing asset productivity, and optimizing our capital structure," company CEO Glenn Nunziata said in a statement. "We look forward to emerging from this process as a stronger company with a solid financial foundation and better positioned to be a leader in the future growth of the wood-based biomass industry."

Enviva operates four wood pellet plants in Eastern North Carolina − in Northampton, Richmond, Hertford and Sampson counties − and a deepwater shipping facility at the Port of Wilmington. According to the company, Enviva supports nearly 1,800 jobs in mostly rural North Carolina and has invested more than $675 million in the state.

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The restructuring is targeted to be completed during the fourth quarter of 2024, the company said.

Enviva officials have said the company's hemorrhaging of money is largely due to collapsing prices for wood pellets, meaning the company is making less money even though it's selling more pellets than ever before. With the company locked into several long-term contracts with customers at low prices, losses could continue to mount unless it is able to renegotiate the agreements.

Company officials also blame high interest rates and operational issues at some of its plants for adding to its financial woes.

In November Enviva reported massive losses in the third quarter and said it was hiring an outside firm to conduct a comprehensive review of the company's financial structure amid worries it wouldn't be able to continue to operate in its current form.

Since then the company has missed a bond payment to its creditors, seen deadlines to repay them extended again and again, and received word from the New York Stock Exchange that it could face delisting because it's stock price had fallen below $1 a share.

The company's financial turmoil has seen its value chopped from more than $3.5 billion last year to just over $23 million today. Enviva's stock price was hovering just above 40 cents a share on Wednesday. It was a high as $80 a share in early 2022.

Enviva’s business model is based on turning trees from the U.S. South into wood pellets, and then selling those pellets to power companies in Europe Asia that burn them as a replacement for coal and other fossil fuels. The idea is that burning wood instead of coal or natural gas is better for the environment because it releases less carbon dioxide and the fuel is coming from a renewable resource.

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But environmentalists have repeatedly questioned the alleged sustainability value of chopping down trees in the U.S., processing them and then shipping the pellets thousands of miles to burn as a "clean" fuel source for power plants. Enviva also has faced environmental justice questions over its logging practices and emissions from pellet production, since many of the company's operations are located in low-income and minority communities.

“Enviva’s financial collapse demonstrates what we have argued for years: the biomass energy industry is not financially viable,” said Heather Hillaker, a senior attorney at the Southern Environmental Law Center, in a statement. “Enviva’s bankruptcy wasn’t caused by just one or two bad contracts, it’s because of a failing industry model that pollutes communities, hurts the climate, and is dependent on government handouts.”

The company has repeatedly said it embraces sustainable logging practices and provides jobs in areas where other economic opportunities are often limited.

Reporter Gareth McGrath can be reached at GMcGrath@Gannett.com or @GarethMcGrathSN on X/Twitter. This story was produced with financial support from the Green South Foundation and the Prentice Foundation. The USA TODAY Network maintains full editorial control of the work.