Wes Edens’ NFE in Talks With Creditors to Take Preferred Equity

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(Bloomberg) — Wes Edens’ New Fortress Energy Inc. is ironing out a proposed restructuring support agreement that would see creditors get preferred equity in the reorganized liquefied natural gas operator, according to people familiar with the situation. 

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Under the proposal, bondholders would take control of the company’s Brazilian assets, while term loan lenders would see recoveries through value tied to FLNG 1, an offshore LNG facility near Altamira, Mexico, said the people, who asked not to be identified discussing a private matter. The recovery value for its term loan debt would also be tied to a terminal in Puerto Rico and other downstream assets, they said.

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The reorganization plan would be executed in the UK as the company looks to ease its debt burden and continue operations, said the people, adding that the firm’s common shares wouldn’t be canceled. Still, talks are fluid and terms of the deal may change, the people said. 

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Representatives for New Fortress and the firm’s adviser Houlihan Lokey Inc. declined to comment. 

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The workout talks come as the firm has struggled to manage delayed projects that have dented cash flow, heaping more pressure on its already distressed debt stack. 

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New Fortress entered into a forbearance agreement with lenders late last year after missing a roughly $30.6 million interest payment on its term loan B facility due in 2028, according to a filing. At the time, it also told lenders that it planned to miss other payments slated for Dec. 31.

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More recently, New Fortress asked creditors for more time to negotiate a restructuring before a forbearance period on some of its borrowings expired on Jan. 9. 

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If New Fortress can’t secure an extension, debtholders can accelerate principal payments and push the company into a bankruptcy process, since its entire debt pile would come due, the regulatory filings show. It listed total debt of $8.9 billion in a financial report for the three months through September, $6.6 billion of which was classified as a “current portion of long-term debt.” 

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Multiple creditor groups have formed amid the company’s woes. A group of New Fortress debtholders have engaged Evercore Inc. and Akin Gump Strauss Hauer & Feld, while other creditors are getting advice from Perella Weinberg Partners and Paul Weiss Rifkind Wharton & Garrison. Law firm Paul Hastings is working with a group holding New Fortress’ 6.5% secured bonds due in 2026 and its 8.75% bonds maturing in 2029. 

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The $2.7 billion of 12% secured notes due in 2029 changed hands at nearly 31 cents on the dollar on Jan. 21, a sharp decline from 94 cents in late March, according to Trace. 

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The company’s share price has plunged more than 80% in the past year, getting a slight boost last week as US natural gas prices spiked due to recent cold weather. Shares rose 0.6% on Monday.

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After selling a facility in Jamaica last year, the company’s main assets include its Altamira site, the Puerto Rico terminal, facilities in Brazil and an under-construction site in Nicaragua.

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—With assistance from Ruth Liao.

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