Pomerantz Appointed Lead Counsel in Enviva Securities Litigation

On January 31, 2023, U.S. District Judge Deborah K. Chasanow, of the District of Maryland, appointed Pomerantz LLP as Lead Counsel on behalf of Dustin Fanucchi – the Lead Plaintiff, and the class, in Fagen v. Enviva Inc., 22-cv-2844 (D. Md.). This securities class action alleges that Enviva Inc. (“Enviva” or the “Company”) misled the market regarding its business model, financial performance, and prospects for growth.

Enviva is the world’s largest producer of utility-grade wood pellets that are used as a substitute for coal in power generation by industrial customers. Significantly, Enviva touts itself as a “growth-oriented” environmental, social, and governance (“ESG”) company with a “platform to generate stable and growing cash flows.”

Allegations against Enviva include that: (i) the Company had misrepresented the environmental sustainability of its wood pellet production and procurement; (ii) Enviva had overstated the cash flow generated by its platform; and (iii) accordingly, the Company had misrepresented its business model and its ability to achieve the level of growth that it had represented to investors.

On October 12, 2022, Blue Orca Capital (“Blue Orca”) – an activist investment firm – published a report in which it alleged that Enviva was “flagrantly greenwashing its wood procurement” and that the Company’s claim to be a “pure play ESG Company with a healthy, self-funded dividend and cash flows to provide a platform for future growth” was “nonsense on all counts.” Blue Orca further alleged that “Enviva is a dangerously levered serial capital raiser whose deteriorating cash conversion and unprofitability will drain it of cash next year” and is “a product of deranged European climate subsidies which incentivize the destruction of American forests so that European power companies can check a bureaucratic box.”

On this news, Enviva’s share price fell 13.1%.