New Fortress raising US$420m in debt, equity - Lands new regional supply contracts
Published:Wednesday | December 23, 2020 | 12:08 AM
New Fortress Energy, NFE, the fast-growing energy company with significant assets in Jamaica, has announced plans to raise US$420 million in separate debt and equity transactions, a move that appears to be aimed at increasing resilience and reducing the company’s leverage by slashing its debt from 10 times to three times its capital.
NFE, which trades on the Nasdaq exchange, supplies all the liquefied natural gas, LNG, used in Jamaica to fuel roughly half the energy needs of the national power grid.
Both offers are being done in the US market with leading financial adviser Morgan Stanley acting as the sole manager for the equity offer.
“We intend to use the net proceeds from this offering, together with the proceeds, if any, from the concurrent secured notes offering for general corporate purposes,” the company announced to the market this week.
The concurrent offers involve the issuing of US$270 million worth of additional shares in the equity float and another US$250 million in the bond raise. The pricing of the equity transaction is around US$51 with a 6.7 per cent coupon on the bond. No timelines were disclosed for the cash raise.
The prospectus indicates that both offers would increase cash at the company from US$153.4 million to US$684.2 million. Its total debt would climb to US$1.24 billion from US$980 million and its total stockholders’ equity would jump from US$98.7 million to US$370 million.
NFE currently conducts operations at its LNG storage and regasification facility at the Montego Bay port, its marine LNG storage and regasification facility in Old Harbour, a landed micro-fuel handling facility in San Juan, Puerto Rico, and also in Miami. NFE is currently developing operations in Mexico, Nicaragua and Ireland.
“We are in active discussions with additional customers in multiple regions around the world who may have significant demand for additional LNG, although there can be no assurance that these discussions will result in additional contracts or the terms of such contracts or that we will be able to achieve our target pricing or margins,” a company statement said.
The company is mostly held by its chairman and CEO Wes Edens, who owns about 67 million units or 38 per cent of the total 174.2 million shares outstanding.
On Monday, NFE also announced that it signed two new energy arrangements to secure fuel for Puerto Rico, Mexico, and Nicaragua.
“With these purchases and the previous purchases of LNG for the company’s Jamaican operations, NFE has purchased LNG volumes equal to about 80 per cent of its expected needs across its current portfolio of terminals and assets,” NFE said in market filings.
“As a company, our goal is to match our LNG purchases as much as possible with our customer volumes, thus reducing our exposure to changes in the market price for LNG across our portfolio,” according to Edens.
Most of its gas contracts are indexed to Henry Hub natural gas pricing, which is regarded as the standard commodity pricing for LNG.
New Fortress reported US$137 million in revenue for its September quarter, more than half of which was earned from Jamaica.