The U.S. subsidiaries of a German wood pellet producer, one of the world’s largest, has filed for bankruptcy, citing construction delays and cost overruns at its Louisiana plant in La Salle Parish, according to the Dow Jones Daily Bankruptcy Review.
Louisiana Pellets Inc. and German Pellets Louisiana filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Alexandria on Thursday after missing a payment to bondholders earlier this year. Parent company German Pellets is also navigating an insolvency process.
Earlier this month, the family-owned business announced in a statement that a German court had appointed an administrator to oversee its assets as well as to assess “the prospects for the company’s continued existence.” The company says a formal insolvency proceeding in Germany would likely begin in early May.
Louisiana Pellets Inc., a closely linked U.S. subsidiary, operates a production plant in Urania, Louisiana. The facility is still under construction and has been plagued with delays and unexpected expenses, according to Peter Leibold, chief executive of German Pellets Louisiana.
The initial phase of construction was completed in late 2015, and the plant began limited production that ultimately unveiled “significant deficiencies in the electrical system requiring remedial work,” court papers say.
Even with the delays, the company says it had expected to reach full production capacity in the next several months, though a second planned phase of construction would require as much as a year to complete.
The plant was financed with $390.2 million in bonds with rates ranging from 7% to 11.5%, on which the company still owes about $340 million, including unpaid interest. But according to court papers filed Friday, Louisiana Pellets missed a Jan. 1 payment to bondholders, who have since seized bank accounts holding nearly $100 million, leaving it without sufficient cash to maintain its operations, court papers say. Read the full story.
