Business Context and Reporting Period
New Fortress Energy LLC filed a Form 8-K dated January 10, 2020, with the report signed on January 13, 2020. The filing reports entry into a new senior secured credit facility. The filing identifies the registrant as New Fortress Energy LLC, while the request metadata identifies New Fortress Energy Inc.
Material Financing and Key Terms
- Facility: Three-year senior secured term loan facility with aggregate principal amount of $800 million.
- Funding: Closing and funding were subject to customary conditions and expected on or before January 15, 2020.
- Use of proceeds: General corporate purposes, repayment of indebtedness under the existing credit agreement, and related fees and expenses.
- Interest rate: LIBOR plus 6.25%, increasing to LIBOR plus 7.75% during calendar year 2021 and LIBOR plus 9.25% from January 1, 2022 through January 10, 2023. A 1.50% LIBOR floor applies.
- Prepayment: Optional prepayments are permitted at any time without premium. Mandatory prepayments may apply to certain asset-sale, casualty, condemnation, and non-permitted-indebtedness proceeds.
- Collateral and guarantees: The facility is guaranteed by Holdings and certain subsidiaries and secured by substantially all assets, including real property, of the loan parties.
Financial Covenants, Risks, and Contingencies
- Beginning with the quarter ending March 31, 2021, the consolidated EBITDA-to-consolidated interest expense and amortization ratio must be at least 1.10 to 1.00.
- The agreement includes customary restrictions on liens, indebtedness, investments, dispositions, dividends and other restricted payments, affiliate transactions, organizational changes, and modifications of other debt.
- Customary events of default include nonpayment, covenant or representation breaches, defaults on other material debt, bankruptcy or insolvency, material judgments, certain ERISA liabilities, impairment of loan documentation, and change of control.
- The filing does not provide financial statements, revenue, profit, cash flow, margin, liquidity, or leverage metrics for a comparable period.
- The principal financial risk disclosed is the facility’s floating-rate structure and scheduled increases in the interest-rate spread, together with collateral and covenant requirements.
Material Changes Versus the Prior Comparable Period
The filing does not present prior-period operating or financial results. The material change disclosed is the replacement or refinancing of existing indebtedness with the new $800 million senior secured term loan facility, subject to funding conditions.
Investor Verification Items
- Verify whether the facility closed and was funded by January 15, 2020.
- Confirm the amount of existing debt repaid and the resulting total debt, cash balance, and liquidity position.
- Review the complete Credit Agreement, including omitted schedules and exhibits, for collateral, covenant, amortization, and default provisions.
- Assess exposure to LIBOR or successor benchmark rates and the scheduled spread increases through maturity.
- Monitor compliance with the 1.10-to-1.00 financial covenant beginning March 31, 2021.
- Review the January 13, 2020 press release for additional transaction terms or management commentary.