Drax in bid to buy US pellet businesses out of administration

Drax has proposed the acquisition out of bankruptcy of Texas Pellets and Louisiana Pellets, both US subsidiaries of German Pellets.

Texas Pellets supplied the Drax Group prior to its bankruptcy and the group is now looking to acquire the operating assets of the business after parent company German became insolvent last year.

The company, formerly one of the biggest pellet producers in the world, filed for insolvency in the Schwerin, Germany in February 2016.

German petitioned the courts to restructure the business through bankruptcy proceedings after it failed due to the rising price of oil, lower pellet revenues after two warm winters and a failed investment in furnace manufacturer Kago in 2010.

For the year to September 2015, the German group turned over €442.5m, according to its website.

One report suggested that more than 130 parties registered interest in German assets.

Now, Selby-based energy generation business Drax has said it has submitted cash bids for the assets of German’s US subsidiaries as part of an auction, to be held on 1 and 2 March.

The bids are part of Drax’s strategy to self-supply compressed wood pellets to support up to 30% of its generation requirement, and the acquisition of these assets would help Drax meet this target, the company said.

Shareholders recently gave Drax the green light to acquire SME energy supplier Opus Energy in a £340m deal as it looks to expand its commercial business.