New Fortress Energy, which is owned 100% by Fortress Investment Group LLC, closed on the new RCF after successful negotiations with SunTrust Bank. The transaction was financed primarily through a $600 million term loan and $175 million revolving credit facility that the company previously held. Under the new terms, the company’s outstanding borrowings are consolidated under the new credit agreement and reduced by $300 million.
The borrowing base was increased from $300 million to $725 million. – The maximum commitment under the new RCF was increased from $250 million to $625 million. The proceeds from the New Fortress Energy and its general partner, NFF, are earmarked for the acquisition of natural gas and related midstream assets.
As part of the amendment, New Fortress has agreed to a lower pricing period of 18 months for the $725 million senior secured term loan facility that was initially a 10-year facility. The extended maturity of the credit facility and lower pricing is expected to result in improved interest expense savings of approximately $10 million annually, as compared to the original loan terms.
According to Wes Edens, the $725 million credit facility with a favorable pricing structure provides flexibility to execute on acquisitions or further grow New Fortress Energy’s portfolio, including an ability to finance acquisitions at favorable cost. “The new credit facility will enable us to rapidly acquire and build critical natural gas infrastructure assets throughout North America,” said Wes Edens, New Fortress Energy’s Founder, Chairman and Chief Executive Officer.
The favorable pricing on the $725 million credit facility provides significant cost savings compared to the borrowing base/average price structure in place at the Company’s existing $275 million credit facility (the “existing credit facility”). The new RCF has an initial tenor of three years and bears a floating interest rate ranging from LIBOR plus 2.50% to LIBOR plus 3.00%.
Wes Edens, New Fortress Energy’s Executive Chairman and Chief Executive Officer said: The enhancements to the facility align with our current and anticipated future growth, provide enhanced capital structures and pricing, enable access to broader funding sources and provide broader strategic options for funding such as our large-scale pipeline projects.