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According to a statement by NFE, through the UK RP process, creditors will exchange NFE debt for a combination of debt, common, and preferred equity.
NFE said there are several steps to the transaction.
Under the terms of the RSA, the first step is to separate NFE into two independent entities.
These include “BrazilCo”, a privately held, standalone company to be owned by creditors, comprised of NFE’s terminals, power plants, and operations in Brazil; and “New NFE”, a publicly traded, integrated LNG-to-power company comprising all other remaining assets and operations of NFE.
Also, NFE said the creditor groups will exchange their debt instruments for a basket of “New NFE” debt, preferred equity, and common shares.
In aggregate, the transaction will result in the reduction of “New NFE” corporate debt from $5.7 billion to $527.5 million, the issuance of up to $2.5 billion of “New NFE” preferred equity, and the issuance of 65 percent of “New NFE” common equity.
Moreover, existing NFE shareholders will have their ownership diluted to 35 percent of “New NFE” common equity and are subject to further dilution if some or all the preferred equity is converted at the end of year three.
Brazilian company
NFE said that the separation of its Brazilian business is “expected to position BrazilCo for continued growth while strengthening Brazil’s energy infrastructure and security.”
Following the closing of transaction, the newly independent Brazilian entity, headquartered in Rio de Janeiro, will be owned by a “consortium of leading global institutional investors with deep expertise in infrastructure development and long-term value creation, extensive experience investing across Brazilian asset classes and over $20 trillion in assets under management.”
The company will continue to be led by Brazil-based executives Leandro Cunha and Jeremy Dawson, each of whom brings decades of experience as energy operators, NFE said.
“Their continued leadership will help to ensure smooth execution and completion of existing projects in Barcarena, while positioning the business for expansion across southern Brazil utilizing the company’s TGS Terminal in Santa Catarina,” it said.
“Landmark milestone”
NFE will launch the UK RP process in April, with the necessary court hearings to review and sanction the plan to follow.
The transaction is expected to be completed by the third quarter of 2026, subject to court availability, customary conditions, and regulatory approvals.
“This consensual restructuring represents a landmark milestone for the company,” said Wes Edens, chairman and CEO of NFE.
“’New NFE’ emerges from this transaction as a fundamentally transformed company. ‘New NFE’ will be a capital-light, low-leverage business that generates significant free cash flow, supported by long-term supply matched with long-term downstream demand,” he said.
“This simple business model positions ‘New NFE’ for robust growth and stability ahead with very little additional capital required. We are grateful to our creditors, advisors, customers, and shareholders for their confidence throughout this process, and we look forward to the bright future ahead for New Fortress Energy,” Edens said.
