New Fortress Energy Surges on Revived Puerto Rico LNG Deal
(Bloomberg) -- Billionaire Wes Edens’ New Fortress Energy Inc. has finalized a seven-year deal worth $4 billion to supply liquefied natural gas to Puerto Rico, the governor confirmed on Tuesday, giving the financially-strained company a shot in the arm.
Shares of the New York-based company surged the most on record, climbing 45%. Bonds for New Fortress Energy debt also jumped on the report of the contract news.
This interim agreement caps months of tumultuous negotiations to renew a longterm agreement for LNG to Puerto Rico, which relies on energy imports for its power demand. The deal still requires final approval from the Financial Oversight and Management Board, the federally appointed watchdog that oversees the island’s finances.
The deal will provide a much-needed boost for New Fortress, which has struggled to turn a profit and is facing a debt crunch, worsened by delays at a Mexico LNG export facility and the Puerto Rico uncertainty.
Terms also include a three-year extension, as well as a provision that would allow the government to use the LNG terminal in San Juan if New Fortress Energy could not deliver the fuel.
In July, the board denied initial plans to give New Fortress a 15-year, $20 billion contract. The following month, however, President Donald Trump fired six of its seven members. The board has paused the bankruptcy proceedings of Puerto Rico’s power company until new members are named and the White House hasn’t indicated when a new board will be picked.
“After an exhaustive negotiation, we were able to substantially modify the agreement with NFE, which provides notable savings for the treasury and more protection for the people,” Governor Jenniffer Gonzalez said in a statement. “This is about getting the best deal for the people of Puerto Rico.”
The uncertainty over the status of the contract has gripped the political nerve center of Puerto Rico, which is plagued with aging energy infrastructure and recurring blackouts. New Fortress Energy is one of a few LNG suppliers to Puerto Rico and operates the main LNG terminal in San Juan. As New Fortress Energy has recently divested its LNG assets in Jamaica, its remaining LNG assets in the Americas have been under scrutiny on whether they can turn a profit.
New Fortress Energy plans to supply the fuel from its Altamira LNG plant off Mexico’s east coast, according to a statement Tuesday.
The contract announcement comes after advisers to New Fortress Energy creditors prepare for confidential debt talks, Bloomberg News previously reported.
(Updates shares and adds detail of where the supply will come from.)
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