RYAM Begins Construction on 70 MW Biomass Cogeneration Project at Jesup

What happened

Rayonier Advanced Materials announced that construction is underway on the Altamaha Green Energy project, a 70 MW biomass cogeneration facility adjacent to its Jesup, Georgia plant, developed with Albioma and the Beasley Group under a long-term power purchase agreement. This marks a milestone in RYAM's biomaterials and green energy strategy, which the company has highlighted as a key part of its plan to shift toward higher-margin bio-based products. The project had been flagged in prior disclosures as a near-term catalyst, with a final investment decision targeted for Q3 2025, so the start of construction is consistent with management's stated timeline. However, from a financial perspective, the AGE project is relatively small compared to RYAM's total debt of $794 million and recurring GAAP losses, and its EBITDA contribution is not expected to be material in the near term. While this development is a positive execution step, it does not address the company's core challenges of high leverage, weak interest coverage, and cyclical pulp market pressures that have driven the prior WAIT rating.

Implication

Investors should monitor whether the AGE project stays on schedule and budget and whether the long-term PPA provides stable cash flows that help deleverage. However, the project's scale is modest relative to RYAM's ~$794 million debt and ~3.5x net debt/EBITDA, so it may take several years for a meaningful financial impact. The company's near-term earnings remain pressured by lower adjusted EBITDA guidance and trade/tariff uncertainties. Until RYAM demonstrates sustained positive free cash flow and a clear reduction in leverage, the equity remains a high-risk turnaround play. The start of construction is a necessary but not sufficient condition for a re-rating; execution on cost cuts and other biomaterials projects will be critical.

Thesis delta

The thesis remains WAIT. The start of construction on the Altamaha Green Energy project is a positive signal for management's execution of its biomaterials pipeline, but it does not change the fundamental risks of high leverage, weak interest coverage, and earnings pressure. The project's EBITDA contribution is not yet realized, and its scale is small relative to the balance sheet challenge.