After Magnolia LNG sales deal falls through, another purchaser surfaces

Washington — The sale of Magnolia LNG from its Australian parent to a privately held energy infrastructure firm failed to come through last week, but a new purchaser emerged for the struggling Louisiana export project.

According to a statement Tuesday by administrator PricewaterhouseCoopers, the sale announced mid-May by Magnolia's Australian parent, LNG Limited, for $2.25 million to Global Energy Megatrend was terminated because of GEM's failure to close the transaction within the required timeframe.

Shortly thereafter, however, LNG Limited "entered into a new transaction under which it has sold its interests in the US entities to another party, Magnolia Holdings, LLC," PricewaterhouseCoopers added. The $2 million transaction closed May 26.

The sale includes LNG Limited's patented liquefaction process technology, but specifies that Bear Head LNG has a perpetual license to the technology. Bear Head, proposed in Nova Scotia, has not been sold as part of the deal.

The scuttled sale to GEM was intended to cover the export project, its 16 employees and the optimized single mixed refrigerant liquefaction technology that would be used at the proposed terminal.

The developments follow withdrawal in April of a takeover offer for LNG Limited that the parent company had previously said was the best chance to save the up to 8.8 million mt/year export project.

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Magnolia LNG received its certificate authorization from the Federal Energy Regulatory Commission back in 2016, but has been unable to secure firm offtake deals with LNG buyers in order to secure financing.

The announcement of the May 26 sale came from voluntary administrators at PricewaterhouseCoopers.

In Australia, voluntary administrators are usually appointed by a company's directors after they decide that the company is insolvent or likely to become insolvent. The administrators did not immediately provide details about the owners or companies affiliated with the buyer, Magnolia LNG Holdings.

LNG Limited's decline has come amid weak global LNG market conditions exacerbated by the coronavirus pandemic. Widespread stay-at-home orders have helped depress demand and international prices.

The $2 million sale also entailed a promissory note subject to liabilities but expected to be worth about $1.33 million, provided the export project reaches financial close and is granted a notice to proceed with construction. As part of the deal, the companies also agreed to a recapitalization proposal that would include a break fee if not consummated by November 30.