New Fortress to raise US$300m in IPO for Ja, int’l build-out
Published:Wednesday | January 30, 2019 | 12:00 AMSteven Jackson/Senior Business Reporter
Energy company New Fortress Energy LLC, whose liquefied natural gas holdings are largely deployed in Jamaica to date, plans to raise US$300 million from its initial public offering of shares covering 12 per cent of the company.
The American gas supplier, which is going public in the United States, has the option of upsizing the offer to US$345 million for 13.5 per cent of the company.
New Fortress intends to use one-third of the proceeds to finance the local build-out plants in Clarendon and Old Harbour in Jamaica. The assets it owns in Jamaica and other markets are valued at just under half-billion dollars, according the IPO prospectus,
New Fortress plans to use roughly US$20 million to complete the construction of the Old Harbour Terminal and US$100 million to partially fund the construction of the Jamalco combined heat power plant in Clarendon – referred to as the CHP plant – according to its market filings last Friday.
The prospectus did not disclose the precise spend for the facilities in Jamaica. It, however, stated that New Fortress would have spent more than US$350 million since 2014 to set up its facilities, with commitments for capital outlay upwards of US$1.35 billion going forward on outlined projects.
“We expect to fund these commitments through a combination of cash on hand, operating cash flows, additional borrowings and the proceeds from this offering,” the company said.
The company led by the US businessman Wes Edens is also looking to the Caribbean and Africa for growth opportunities. It currently holds contracts for five terminals across the region, including Mexico, and has two operational terminals and three under development.
The terminals in Jamaica include one completed in Montego Bay, which is operating at 36 per cent of its capacity, and an offshore terminal at Old Harbour set to commence operations this quarter.
The three terminals in development are based in Puerto Rico, Mexico and Ireland. It is also planning to send 1.7 million gallons of LNG to the Dominican Republic with the setting up of a import terminal facility there. New Fortress also operates a liquefaction manufacturing facility in Miami that feeds the terminals in Jamaica. It also plans to develop five to 10 other liquefaction facilities by 2023, led by a plant in Pennsylvania set to open in 2019.
The Old Harbour marine LNG storage and regasification facility is expected to process six million gallons of LNG daily and supply gas to the 190-megawatt power plant owned by the Jamaica Public Service Company (JPS). The JPS plant requires 350,000 gallons of LNG daily. Another power plant at the alumina plant Jamalco at 150MW requires 269,000 gallons per day.
“We expect that our Old Harbour Terminal will operate at 16 per cent capacity to service JPS and Jamalco. We will have the ability to service other potential customers with the excess capacity of the Old Harbour Terminal, and we are seeking to enter into long-term contracts with new customers for such purposes,” said New Fortress.
The company plans to offer 20 million Class A shares at US$15 per share, with the option of an additional three million shares in upsizing the offer. The offer puts a rough valuation of US$2.5 billion on the rapidly growing company, which last reported total assets of US$485 million and equity of US$306 million.
New Fortress plans to list on the Nasdaq stock exchange under the ticket NFE. American institutions, including Morgan Stanley, Barclays, Citigroup, and Credit Suisse are acting as lead book-running managers for the share float.
New Fortress made a net loss of US$43.4 million on total revenues of US$80.9 million over nine months ending September 2018. The losses were attributed to the rapid pace of infrastructure development at the same time that the company was paying down its debt.
The energy company started booking substantial revenue in 2016, with the completion of the Montego Bay terminal. Its main customer is power utility JPS.
After the IPO, the 100 per cent holdings of parent company New Fortress Energy Holdings will be diluted, but it will retain significant interest “through its ownership of 147 million Class B shares, representing a 88 per cent voting and non-economic limited liability company interest” in NFE, as stated in the prospectus.