New Fortress Energy, the US company that last Friday signed agreements with Petróleos Mexicanos (Pemex) for the exploitation of a natural gas field in deep waters of the Gulf of Mexico, and with the Federal Electricity Commission (CFE) to expand and improve the transportation infrastructure for this hydrocarbon, has now signed another agreement to expand its activities towards the commercialization of liquefied natural gas (LNG), with the US asset manager fund, Apollo, for the formation of a joint venture (joint venture, in English) that will have 11 ships previously owned by New Fortress, a transaction valued at 2,000 million dollars.
Under the definitive Capital Contribution and Purchase Agreement, the newly formed platform or joint venture will be owned approximately 80% by Apollo funds and 20% by NFE.
“This transaction will create a global platform for marine infrastructure backed by long-term contracts, benefiting from New Fortress’ LNG operations and development activities, as well as Apollo’s leadership in maritime and investment expertise,” the firms said in a statement.
The Platform provides critical infrastructure for the delivery, storage and regasification of LNG to countries around the world. It should be remembered that, according to the director of the CFE, Manuel Bartlettthe objective of the association with New Fortress in Baja California will be to lay the foundations for the state-owned electricity company to venture into the business of selling LNG to Europe, where the Russian gas offer has dropped, bringing prices to more than $18 per million British thermal unit (BTU) for natural gas, but liquefied it can cost three times as much.
In the joint venture between New Fortess and Apollo, the 11-vessel portfolio consists of six Floating Storage and Regasification Units (FSRUs), two LNG Carriers (LNGCs) and three Floating Storage Units (FSUs), they explained.
The implied enterprise value of the transaction is approximately $2 billion, and New Fortress will receive approximately $1.1 billion in proceeds after accounting for its interest in the joint venture and payment of existing debt.
Also, as part of the transaction, New Fortress Energy has agreed to charter 10 of the 11 joint venture vessels for a period of up to 20 years from the closing of the transaction or the expiration of the vessels’ existing third-party charter agreements. The Platform will also seek growth opportunities in support of both New Fortress and third parties, which means that both CFE and Pemex will be able to lease this infrastructure if they continue with plans to enter the global LNG market as marketers.
“Together with Apollo, we are creating a leading marine LNG infrastructure platform to help accelerate the energy transition while freeing up capital to continue investing in our fast LNG and downstream LNG projects around the world,” said Wes Edens, Chairman and CEO of New Fortress Energy. “We are pleased to partner with Apollo to create a company of maritime infrastructure that will help support New Fortress Energy’s growing LNG infrastructure needs in the future.”
Brad Fierstein, Partner at Apollo, said: “Energy transition and reliability are global priorities and fundamental to Apollo’s sustainable investment platform. We are pleased to further these initiatives through this long-term investment together with our partners in the New Fortress Energy joint venture. This is a high-quality portfolio that increases energy security around the world, accelerates efforts to decarbonization and makes it easier to use LNG, which is cleaner and more affordable than diesel. We look forward to investing behind the growth of the platform to drive a more sustainable future.”
Subject to the satisfaction of customary closing conditions, including receipt of certain regulatory approvals and third party consents, closing of the transaction is expected to occur in the third quarter of 2022. Proceeds from the transaction are expected to be used to fund New Fortress LNG delivery acceleration projects, as well as for ongoing infrastructure and general corporate purposes.
New Fortress Energy, traded on NASDAQ as NFE, was formed in New York a quarter of a century ago, as a energetic to meet the needs first regional, then national and finally in various countries. Meanwhile, Apollo is a high-growth global alternative asset manager that has been pursuing the return of its clients’ projects for three decades. It has Athene, a retirement services business and solutions for institutions. As of March 31, 2022, Apollo had approximately $513 billion in assets under management.
