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The war in Ukraine and the resulting energy shortages in Europe were the main reasons for the outage of a small biomass plant in South Carolina, which was closed for almost a year.
LLC "Jasper Pellets" is clinging to the hope of finding a buyer as soon as possible by the end of October and using the proceeds to pay off its debts.
This promises to be a difficult task.
The Ridgeland-based company, which ran afoul of neighbors, environmental groups and regulators about two years ago over air pollution, noise, odors and other issues, closed in late 2021.
The main reason was a complex legal dispute with a foreign company that bought all of its wood pellets for resale mainly as a fuel source in Europe.
According to court documents, the controversial split allowed manufacturer Lowcountry to "lose money to fund its operations" and forced it to close. Last year's sales fell 51% from 2020 to $2.66 million.
The company was cash-strapped and closed in November, around the time it defaulted on more than $12 million in debt. Jasper Pellets went bankrupt on the eve of Memorial Day.
"Our goal is to sell the property as quickly as possible so that we can pay off all creditors in full," Chief Executive and majority owner Charles Knight said in a written statement shortly after the filing.
Wood chips were one of the feedstocks that turned the now-closed Jasper Pellets plant in rural Ridgeland into a source of biofuel. personnel file
Different NoteholdersKnight, of Valdosta, Georgia, co-founded Ridgeland Pellet Co. in 2018, which plans to invest $8.1 million over the next five years and create 27 jobs in rural Jasper County. He and his partners bought and reopened an existing manufacturing facility on Nimmer Turf Road, a few miles west of I-95.
“We are pleased to be able to contribute to the development of Jasper County's existing industry, as well as the nearby port infrastructure and this project's proximity to several sawmills that will provide our business with wood chips and other commodities we need. . said the knight.
The startup's funding included more than $12.4 million in tax-exempt bonds issued by the South Carolina Economic Development Authority. The debt was then sold to investors represented by the US bank as trustee.
The company's problems included production restrictions, permitting issues and congestion at the nearby Port of Savannah, where it shipped all of its produce to Danish company CM Biomass under a long-term contract.
Jasper Pellets filed for bankruptcy protection on May 27, listing about $15 million in secured and unsecured debt. He valued his company's assets, mostly machinery, heavy equipment and real estate that could be sold to pay off creditors, at $25.1 million.
Jasper GranulesJasper Pellets opened a store in Ridgeland, a rural area of about 4,000 people about 70 miles southwest of Charleston, in 2018.
BRANDON MEDALLION | MAIL AND MAIL
According to the lawsuit, the company and its separate Scandinavian business partner tried to find a compromise and resolve any issues after filing. The transaction required CM Biomass to waive its financial claims and take over the South Carolina exporter's other accounts in exchange for full ownership of the business.
But bondholders fought back, alarmed that the terms could net shareholders of the bankrupt company cash. Jasper Pellets' attorneys called the objection "pointless" and "vindictive".
"So we're back to square one," said bankruptcy attorney Michael Beal of Columbia Beal LLC, who is representing the debtor.
Brief History of FusesBeale said Jasper Pellet's assets would most likely have been up for sale at a conventional auction or mortgage sale but for the war in Ukraine that would have led to widespread energy price hikes following the Russian invasion on February 24. The price of wood pellets in Europe has roughly doubled to around $300/t, raising doubts about the status of the closed plant.
"It definitely got people's attention," Beal said.
The clock turns. Jasper Pellets' likely final plan is to hold a simple bankruptcy auction. The problem is that the sale has to be arranged and completed by Oct. 31, which is a no-brainer in the federal court system.
At a hearing last week in downtown Charleston, a bankruptcy attorney representing the US government's Office of Trustees disagreed with Jasper Pellets over a proposal to spend $175,000 plus the cost of hiring FTI Capital Advisors to run the company to sell to potential buyers in the United States. and abroad. A Washington DC investment bank is entitled to a "contingency fee" based on the size of the application.
"They accept it for contingencies," Beal said.
The goal is to catch the so-called hunter, a buyer who guarantees the purchase of an asset at a predetermined price. Thus, the word will be open to competing proposals.
"We believe that the suing bidder is adding significant value because of the message it is sending to the market: If you want to buy these assets, you better attend the bankruptcy auction," Beal told Judge Elisabetta GM Gasparini.
The company's unsecured creditors, to whom it collectively owes about $2 million, support the "four squares" plan and say it's key to securing the deal's chances of success.
"It's a very quick sale process," said Charles P. Summerall IV, the Charleston attorney representing the group.
Secured lenders have little say in the game at this point, including whether they will use the money owed to them to fund a $12.4 million non-cash "loan offering" to Jasper Pellets. US Atlanta bank attorney John Elrod indicated that bondholders had lost their temper, saying the Oct. 31 sale was "necessary" and "a difficult time for my clients."
Beal expects the wood pellet market to grow overseas to generate interest and generate revenue at least as high as Jasper Pellets' debt. As of last week, 13 potential bidders have signed non-disclosure agreements. Most Expected.
"We have a big market for pellets and we hope the auction will be successful," Beal said.
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