New Fortress Energy Inc.
10/01/2024 | Press release | Distributed by Public on 10/01/2024 04:30
Material Event Form 8 K
Item 1.01. Entry into a Material Definitive Agreement
Transaction Support Agreement
On September 30, 2024, New Fortress Energy Inc. (the "Company," "we," "us" and "our") entered into a Transaction Support Agreement (the "Transaction Support Agreement") with certain holders of the Company's existing 6.750% Senior Notes due 2025 (the "Existing 2025 Notes"), the Company's existing 6.500% Senior Notes due 2026 (the "Existing 2026 Notes") and the Company's existing 8.75% Senior Secured Notes due 2029 (the "Existing 2029 Notes," and together with the Existing 2025 Notes and the Existing 2026 Notes, the "Existing Notes"). The Transaction Support Agreement relates to a series of transactions (the "Transactions"), among the Company, certain of the Company's direct and indirect subsidiaries and the Supporting Holders, intended to extend the maturity profile of the Company's indebtedness while providing additional operating liquidity and financial flexibility. These Transactions include: (a) redeeming in full the Existing 2025 Notes with a portion of the net proceeds from the issuance and sale to the Supporting Holders (the "New Notes Transaction") of $1.2 billion aggregate principal amount of 12.000% senior secured notes due 2029 (the "New Notes") to be issued by a newly-formed, wholly-owned indirect subsidiary of the Company (the "Subsidiary Issuer") and (b) the exchange (the "Private Exchange Transaction") by the Supporting Holders, and subsequent cancellation by the Company, of approximately $1.4 billion aggregate principal amount of Existing 2026 Notes and Existing 2029 Notes on a dollar-for-dollar basis for additional New Notes.
The Company intends to use any remaining net cash proceeds from the consummation of the Transactions for general corporate purposes. The Transactions will be consummated on the terms set forth in definitive documentation in form and substance satisfactory to the Company and the Supporting Holders holding a majority in principal amount of each series of the Existing Notes (the "Majority Supporting Holders").
Subject to the terms and conditions set forth in the Transaction Support Agreement, the Supporting Holders have agreed to (a) exchange all of their Existing 2026 Notes and Existing 2029 Notes in the Private Exchange Transaction for New Notes and (b) purchase for cash the New Notes in the New Notes Transaction (the "New Money Commitment"). The Supporting Holders' obligations under the Transaction Support Agreement are conditioned upon (a) the sale by the Company of common equity yielding gross cash proceeds to the Company of not less than $250.0 million (the "Equity Raise"), (b) the effectiveness of certain amendments to the Company's existing credit agreements and (c) other customary conditions, including the negotiation and execution of definitive documents.
Upon the successful completion of the transactions described in the Transaction Support Agreement, the holders of the New Notes will benefit from a first-priority perfected security interest in and lien on all assets and property of the Subsidiary Issuer, which will include up to a 49% equity interest in the holding company that indirectly owns the Company's business in Brazil and, subject to compliance with the agreements governing the Company's outstanding indebtedness, certain other assets that do not currently constitute collateral under the Revolving Credit Facility, the Letter of Credit Facility, the Term Loan B Facility or the Term Loan A Facility. The New Notes will also be guaranteed by any wholly-owned subsidiaries of the Subsidiary Issuer. Through certain intercompany transactions to be completed in connection with the issuance of the New Notes, the New Notes will benefit from direct or indirect first priority secured claims against the remainder of the equity interest in the holding company that indirectly owns the Company's business in Brazil, certain other assets that do not currently constitute collateral under the Revolving Credit Facility, the Letter of Credit Facility, the Term Loan B Facility or the Term Loan A Facility, as well as direct or indirect first priority secured claims against the collateral securing the Existing 2025 Notes, Existing 2026 Notes and Existing 2029 Notes. However, the New Notes will be effectively junior in right of payment to the Revolving Credit Facility, the Letter of Credit Facility and the Term Loan B Facility to the extent of the value of the assets constituting the Company's first fast liquified natural gas ("Fast LNG") unit off the coast of Altamira, Mexico, and effectively junior in right of payment to the Revolving Credit Facility, the Letter of Credit Facility, the Term Loan B Facility and the Term Loan A Facility to the extent of the value of the assets constituting the Company's second FLNG unit, the Company's subsidiary owners of which guarantee those credit facilities, and which does not constitute collateral for the Existing Notes and will not constitute collateral for the New Notes.
Upon consummation of the Transactions, the Transaction Support Agreement provides that Supporting Holders may elect to receive, in addition to the New Notes, a commitment fee equal to either (i) 5.00% of the aggregate principal amount of such Supporting Holder's New Notes, payable in Class A common stock of the Company at the share price to be paid by investors in the Equity Raise (the "Equity Commitment Fee"), (ii) 2.00% of the aggregate principal amount of such Supporting Holder's New Notes, payable in kind in the form of additional New Notes (the "PIK Commitment Fee"), or (iii) a combination of the foregoing. In the event any Supporting Holder elects to receive the PIK Commitment Fee, the Equity Commitment Fee that would have been payable to such Supporting Holder shall be ratably reallocated among each Supporting Holder that elects the Equity Commitment Fee.
Additionally, the Supporting Holders' have agreed, in connection with the Transactions, to consent to certain amendments to the indentures pursuant to which the Existing 2026 Notes and the Existing 2029 Notes were issued, which amendments will become effective upon consummation of the Transactions. These consents would permit the Company to execute a supplemental indenture or take other action, together with the trustee under each such indenture, to subordinate the liens on certain of the collateral securing the obligations under each indenture and related notes to the liens on the same collateral securing the obligations under the Company's existing credit facilities, and to remove all covenants and events of default that may be removed in compliance with terms of such indentures.
The Transaction Support Agreement includes representations, warranties, covenants (including restrictions on certain corporate actions during the term of the Transaction Support Agreement) and closing conditions customary for agreements of this type. Pursuant to the terms of the Transaction Support Agreement, the Company has agreed, through November 30, 2024, to work solely with the Supporting Holders to consummate the Transactions, and not to solicit, discuss, agree to or otherwise pursue alternative transactions to refinance its indebtedness. The Transaction Support Agreement also grants the Majority Supporting Holders (or holders of more than 50% of the principal amount of the New Notes after the closing date of the Transactions) the right to appoint a director to the Company's board of directors (the "Board"), provided that such representative shall be reasonably acceptable to the chairman of the Board. The Transaction Support Agreement will, among other circumstances, terminate upon the earliest of: (a) mutual written consent of the Company and the Majority Supporting Holders, (b) on the settlement date of the Transactions, or (c) on November 30, 2024, if the Transactions have not yet been consummated.
The foregoing is a summary of the material terms of, and is qualified by, the Transaction Support Agreement.