trending Market Intelligence /marketintelligence/en/news-insights/trending/slxujnnch3ypkuqh7oztoa2 content
BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
PRIVACY & COOKIE NOTICE
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *

* Required

In this list

Freeport's $1.25B refinance could be beacon for LNG developers facing delays

State of the Market: Mining Q2-2019

Mining Exploration Insights

Shareholder Advocates Say New SEC Policy To Prompt Litigation, Less Transparency

Groups Urge Business Roundtable CEOs To Act On New Corporate Purpose Declaration


Freeport's $1.25B refinance could be beacon for LNG developers facing delays

FreeportLNG's $1.25 billion project bond offeringcould inspire other prospective LNG exporters looking to refinance as they facethe long transition from project planning to sufficient cash flow.

"It'sa good sign that the bond was placed successfully and well-received in themarket," Rohit Chaudhry, energy and project partner at Chadbourne &Parke LLP, said in an interview.

Bondofferings are effective for refinancing mini-perm debt raised from commercialbank lenders to finance initial project construction, explained Chaudhry, whowas a legal adviser to lenders for Freeport LNG's second and third liquefactiontrains on Quintana Island near Freeport, Texas.

TheFreeport LNG Development LPaffiliate's $1.25 billion deal is part of a maneuver to mini-perm debt. The projectcompany is preparing to unveil subsequent tranches through similar offerings torefinance all of its bank debt for its second liquefaction train and raisecapital for the third train, multiple sources close to the deal said. FreeportLNG's offering of 4.125% senior secured notes due 2038 was led by Goldman Sachs& Co., Credit Suisse, HSBC and RBC Capital Markets.

Amida supply glut, Freeport LNG's private placement is a signal to otherprospective LNG developers looking to extend their maturities as their projectshit snags, said Raymond James Financial Inc. analyst Luana Siegfried.

"Ithink we can see situations, similar to the debt launched by Freeport LNG, withother [LNG] companies specifically because we've seen operational timelinesbeing pushed back over and over again," Siegfried said in an interview."Today's LNG companies have large projects that are prone to delays. …Companies are not generating cash as fast as first predicted. But if they canget short-term or medium-term relief by extending these maturities, it can givethem some comfort. The first year [of project construction] is kind of trialand error. In the first year, companies don't have robust cash generation,"she said.

InJune, Cheniere Energy Partners LPlaunched an upsizedoffering of $1.5 billion of 5.875% senior secured notes due 2026, largely toprepay a portion of its outstanding credit facilities.

TheLNG exporter refinancedup to $2.8 billion of senior secured credit facilities in January to prepay aterm loan and redeem roughly $2.1 billion of senior notes. It has also beenseeking debt for thesixth train of its Sabine Pass terminal in Cameron Parish, La., and the thirdtrain of its Corpus Christi facility in San Patricio County, Texas.

has reportedlybeen eyeing a similarroute for its Cameron LNG terminal, whose first train is to go online in 2018. TheHackberry, La.-project receivedapproval from FERC and the U.S. Department of Energy for an expansion programthat would include up to two additional liquefaction trains and an extra LNGstorage tank.

White& Case LLP was Freeport's legal adviser on the $1.25 billion offering.

Aspokesperson for Freeport LNG in Houston declined to comment on financing movesfor the third train.