Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
LNG | Natural Gas

LNG Limited's required financing to stay afloat falls through

Commodities | Agriculture | Biofuels | Energy | Electric Power | Natural Gas | Oil | Crude Oil | Refined Products

Market Movers Europe, Apr 6-10: Oil and power markets brace for production cuts and demand drops amid COVID-19

LNG | Natural Gas | NGL

Platts LNG Alert

LNG | Natural Gas | Shipping | Dry Freight | Marine Fuels | Tankers

Bunker and Residual Fuel Conference, 17th Annual

LNG | Natural Gas | Oil | Crude Oil

ExxonMobil slashes 2020 capital spending by 30%

LNG Limited's required financing to stay afloat falls through

Highlights

Magnolia LNG project in US in jeopardy

Company working with suitor to obtain cash infusion

Houston — Bridge financing essential to keeping LNG Limited operating long enough to close an agreement to be taken over by a Singaporean investor fell through, amid a further deterioration in market conditions due to the coronavirus pandemic, the Australian company said.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The development raises the potential for liquidation, which would imperil the company's proposed Magnolia LNG export project in Louisiana.

The health crisis has impacted trade flows and effectively shut off the ability of US developers to meet face to face with prospective customers in Asia and Europe to secure commercial agreements to support their projects. That has combined with an already challenging market environment that has been beset by low international prices and weaker-than-expected demand.

LNG Limited has enough cash to stay afloat until late April, but doesn't expect the takeover to be consummated until May 28 at the earliest, CEO Greg Vesey said in a statement posted on the developer's website Friday local time. The company is working with its suitor to help it secure new financing, but can't be assured that effort will be successful, Vesey said.

"First Wall Street Capital Corp. has advised LNG Limited that it will not provide funds according to the terms of the legally binding secured convertible note subscription deed," Vesey said. "LNG Limited has therefore terminated the deed and the security provided under that deed and reserves all of its rights against First Wall Street Capital Corp."

The lender did not immediately respond to a message seeking comment.

When the $75 million (A$114 million) takeover offer from an energy investor with ties to floating regasification facilities in Asia and Europe was announced February 28, LNG Limited said the deal was critical to being able to save Magnolia LNG. The alternative was the risk of administration – akin to bankruptcy in Australia -- or liquidation, it said at the time. Insolvency would trigger contract clauses that could allow counterparties to terminate the project's engineering, procurement and construction contract and its site port lease.

Since then, LNG market turmoil has increased due to the coronavirus. The market value of LNG Limited shares has plummeted to less than half the offer price, to $34 million.

LNG Limited said it continues to believe the takeover offer is its best shot at preserving the company and its main project. The deal, itself, is not guaranteed of being successful, however. Terms include that prior to closing there be "no material adverse change occurring in respect of" LNG Limited.

Magnolia LNG already has a permit certificate from US regulators and a fully wrapped EPC contract. What it does not have, to date, are any firm offtake deals. Last fall, the company announced a preliminary deal for 2 million mt/year of supply that is tied to a proposed Vietnamese power project, but that transaction still must be finalized. In its announcement of the takeover offer, the company said it could not assure additional offtake commitments would be secured in the market environment at the time.

Besides Magnolia LNG, LNG Limited also has proposed an export terminal in eastern Canada called Bear Head LNG. The company had previously said it continues to market capacity there, primarily to major Western Canadian Sedimentary Basin gas producers.