LNG

Three leading US-based liquefied natural exporters, project developers and infrastructure owners, Cheniere Energy, Kosmos Energy and New Fortress Energy are testing the debt market’s appetite for LNG offerings in the form of senior notes totalling up to $2 billion.

Cheniere, the owner of the Sabine Pass export plant and the Corpus Christi facility in Texas and their expansion projects, intends to use the proceeds from the offering to retire all or a portion of the approximately $1.5 billion outstanding aggregate principal amount of Cheniere Corpus Christi Holdings senior secured notes due in 2025.

The Cheniere 2034 Notes will rank “pari passu”, or on an equal footing, in right of payment with existing senior notes at Cheniere, including the senior notes due 2028.

Kosmos Energy, which is based in Dallas, Texas, announced an offering of $300 million of convertible senior notes due 2030 by way of a private placement.

Kosmos is an exploration and production company with assets in the Atlantic Margin, including a stake in the floating LNG ventures being developed offshore West Africa in partnership with UK major BP and the nations of Senegal and Mauritania.

Africa to GoM

The company is also active in other projects, including offshore Ghana and Equatorial Guinea in West Africa and in the Gulf of Mexico.

Kosmos said it intended to grant the initial purchasers an option to purchase up to an additional $45M aggregate principal amount of notes, for settlement within a 13-day period beginning on, and including, the date on which the notes were first issued.

“The notes will be senior, unsecured obligations of the company and will rank “pari passu” with the company’s existing senior notes and the revolving credit facility,” said Kosmos.

Kosmos said it intended to use the net proceeds from the sale of the notes to repay a portion of outstanding indebtedness under the company’s commercial debt facility and pay the cost of capped call transactions as well as fees and expenses related to the offering.

“The capped call transactions are expected generally to reduce potential dilution to the company’s common stock upon any conversion of the notes and/or offset any cash payments the company is required to make in excess of the principal amount of converted notes,” Kosmos explained.

New Fortress

The third offering came from New York-based New Fortress Energy (NFE) and involved a cash tender for up to $250M of senior secured 6.750-percent notes due in 2025.

NFE activities span Gulf of Mexico LNG production, imports of cargoes to terminals in Brazil linked to gas-fired power and power assets in the US territory of Puerto Rico.

“The tender offer is subject to customary conditions, including, among others, that the offeror receive gross proceeds of at least $500M from a debt financing on terms and conditions acceptable to the offeror,” said NFE.

NFE retained Morgan Stanley & Co to serve as the sole dealer manager for the tender offer.

New Fortress Energy has closed its first issuance of a fully committed $180 million bond facility through a subsidiary to pursue its growing liquefied natural gas and power activities in the Caribbean region.

New Fortress, the owner of LNG facilities in Florida and in Jamaica, said its NFE South Power Holdings unit arranged the transaction through NCB Capital Markets of Barbados.

Under the facility, the New Fortress unit issued $136.3M of 8.25 percent secured long-term fixed-rate bonds due in 2034 and up to $43.7M of 11 percent unsecured fixed-rate bonds due in 2036.

Some $117M of bonds were sold and New Fortress has a commitment from NCB Capital to purchase the outstanding bonds upon completion in the first quarter of 2020 of construction of New Fortress’s combined heat and power facility at Clarendon in Jamaica.

Net proceeds from the bond sale will be used to complete the construction of the power plant and to reimburse shareholder advances made by New Fortress.

The New Fortress company is led by Wes Edens, co-founder of the private equity group Fortress Investment.

Among his other activities, Edens is also co-owner of the English Premier League soccer club Aston Villa whose most high-profile fan is Prince William, elder son of the late Princess Diana and second in the line of succession to the British throne.

New Fortress made its debut on the Nasdaq global exchange in January 2019 after an initial public offering. Its main corporate focus now is introducing LNG to markets that lack access to the fuel.

In addition to its 100,000 gallons per day liquefaction plant in Miami, it operates a floating LNG terminal in Montego Bay, Jamaica, along with a fuel-handling facility in the US territory of Puerto Rico.

The Miami facility began operations in April 2016 and enables the company to produce LNG for export in intermodal ISO containers to the Caribbean and to small-scale customers in southern Florida.

“We are very pleased to partner with NCB Capital and the investment community in the Caribbean for the financing of the region’s first large scale gas-fired, co-generation power plant,” said Edens, the New Fortress Chairman and Chief Executive.

“We wanted to enhance our great partnership with Jamaica by giving investors a stake in this historic achievement by the country,” added Edens.

“Jamaica continues to be a model for the Caribbean, and we’re looking forward to turning on the plant in the coming months,” stated the CEO.

NCB Capital said it decided to partner with New Fortress because of the work that they have been doing across the Caribbean region in bringing in cleaner and cheaper energy.

“Liquefied natural gas is a cleaner and more efficient source of energy, and one of its major customers, the Jamalco Alumina plant, is a significant player in the mining industry which is a major contributor to Jamaican GDP,” said Steven Gooden, CEO NCB Capital.

“Lower energy costs bode well for us as consumers and the economy as a whole,” added Gooden.