Evaluating Enviva’s impact on Southampton County

Published 10:00 am Friday, April 12, 2024

Enviva, an industrial wood pellet supplier that operates a plant in Southampton County, announced on March 12 that it had filed for bankruptcy relief under Chapter 11 of the U.S. Bankruptcy Code. 

The company, which is the largest industrial wood pellet supplier in the world, has made clear its plan to emerge from Chapter 11. 

However, to summarize the impact to the county if the plan does not come to fruition, The Tidewater News reached out to some local officials for their thoughts.

“Obviously it would be a huge loss for the county,” Southampton County Board of Supervisors Vice Chairman William Hart Gillette said. “It would affect every citizen, to tell you the truth, and it really is a most inopportune time for this to arrive at our door.”

He affirmed that the impact every citizen would feel would be connected to the loss of revenue to the county.

“Each citizen that pays taxes, any time something like this happens, it affects the citizens at large,” he said.

If Enviva were not to emerge from Chapter 11, he indicated that it would certainly lead to a doubling of the county’s efforts that are already underway to bring business into the locality.

He mentioned that the Board of Supervisor is beginning the 2024-25 budget process for the county.

“We’ve got several things on the drawing board to look at and to finance that are very much needed, we can’t do without them,” he said. “And to take a loss in the revenue stream obviously would impact that. It’s not that much different from a family losing part of their revenue stream. The county’s not much different than that.”

He said that from his point of view, now is a bad time to increase spending.

“There are a lot of things we’d like to do, but right now we have to be very careful, extremely careful,” he said.

However, he communicated his hope that Enviva will weather the storm and emerge from Chapter 11.
“That’s obviously the bright side of this, and that’s not out of view yet anyway,” he said. “It’s still very much a possibility.”

Of Enviva’s financial situation, Southampton County Board of Supervisors Chairman Dr. Alan W. Edwards said, “We are very concerned, but a good omen is that their taxes to the county were paid this year.”

Franklin Southampton Economic Development Inc. President and CEO Karl T. Heck said Enviva is a public company, “so at this point, you just have to go with the public documents that they’ve (shared), that they’re working through a plan and hoping to be out by the end of the year.”

He considered briefly what would happen if Enviva does not emerge from Chapter 11.

“If they were liquidated, all their assets would be sold by the court, and they’d go to another company,” he said. “That’s how it works.”

But then he added, “From everything we know, Enviva is not planning to go that route. They’re planning to emerge from Chapter 11 and reduce some of their debts and work through some of the contracts that they have so they can operate profitably in the future.”

As for the Enviva Southampton plant, he said, “At this point, Enviva is still hiring people over there, they’re still running as normal as anybody does that’s going through the bankruptcy process.”

Southampton County and the state have provided incentives to Enviva to help it during its time in the county.

“(Enviva) originally came in 2011, and they had a 2018 expansion, so both of those did get a little state money — the governor’s Opportunity Fund for the original location here, and then they got something from the Virginia Investment Partnership in 2018,” Heck said.

He also noted that Enviva’s Southampton plant is in an Enterprise Zone.

“So the Enterprise Zone allows certain benefits — reduction in machinery and tools tax, half payment for electrical utility service,” he said. “They got some infrastructure-related incentives to help build natural gas out there. The rest is your standard issue Enterprise Zone benefit package. They basically got the standard Enterprise Zone suite of benefits that anybody out there would get.”