Drax Biomass—the wood pellet manufacturing company that operates two huge white pellet storage domes at the Port of Greater Baton Rouge, as well as two other pellet production facilities in the area—has been selected as the winning bidder for the acquisition of Louisiana Pellets out of bankruptcy.
The Urania-based company filed for Chapter 11 in early 2016 and recently idled production. The proposed acquisition comes after a multi-week competitive bidding process, which culminated in an auction on March 30, and will enable Drax Biomass to more than double its pellet production capacity. Louisiana Pellets has a production capacity of more than 450,000 metric tons per year.
A Drax Biomass official says having the storage, handling and transit facility at the Port of Greater Baton Rouge, as well as other manufacturing facilities in Bastrop and Gloster, Mississippi, were key factors in the company’s decision to pursue the acquisition of Louisiana Pellets. The deal, financial details of which were not disclosed, will mean additional business for the Port of Greater Baton Rouge, he adds.
“We plan to bring the Urania volume through Port Allen,” says Drax Biomass spokesman David Malkin. “That will result in additional rents for the port.”
The incremental volume will also strengthen the business case for construction of a rail chambering yard across the Intracoastal Waterway from the Port Allen storage facility, Malkin says. The port’s board of commissioners approved an expansion of the port’s rail facilities in early 2015, but the chambering yard—which would house rail cars—hasn’t yet been constructed.
“Once constructed, this yard will greatly expand the port’s capacity to serve new tenants and help it become a growth engine for the region,” Malkin says.
Last week’s auction results are contingent upon a court approved sale of the assets, which is currently scheduled for April 4. If approved, Drax Biomass intends to close on the sale by the end of the month.
Drax Biomass began operations at the port in 2015, more than two years after announcing a $120 million investment in Louisiana. The pellets it manufactures then stores and ships from its Port Allen facility are used for power generation in the United Kingdom.