US LNG firm Tellurian, the developer of the Driftwood LNG project in Louisiana, said it had signed a deal to amend the terms of certain debt instruments in order to boost near-term liquidity and provide the company with flexibility to complete the sale of its upstream assets.
Among other items, the amendment provisions include a reduction in Tellurian’s minimum cash balance requirement and the ability for the company to make its upcoming interest payments in-kind, according to a statement by Tellurian.
The firm said in a separate SEC filling that it has entered into a letter agreement with an institutional investor providing for, among other things, amendments to the indentures governing its 10.00% senior secured notes due 2025 and its 6.00% secured convertible notes due 2025 previously issued to the investor.
The deal allows Tellurian to reduce its minimum liquidity requirement from $40 million to $25 million from February to through and including April 30, 2024.
Also, Tellurian agreed to provide a “non-recourse pledge of all of its equity interests in Driftwood LNG Holdings and a certain intercompany note to secure the obligations under the indentures governing the notes.”
CEO Octavio Simoes said this amendment to “our debt agreement is pivotal towards establishing a sustainable capital structure and accelerating our strategic priority, Driftwood LNG.”
“It also provides us the time and flexibility to complete the sale of our upstream assets in a manner that maximizes value for our shareholders while we maintain our focus on the intensive negotiations associated with the commercialization of Driftwood LNG,” he said.
Earlier this month, Tellurian said it is exploring the sale of its Haynesville upstream assets as it works on securing financing for the first phase of its Driftwood LNG project worth about $14.5 billion.
Under the first phase, Tellurian aims to build two LNG plants near Lake Charles with an export capacity of up to 11 mtpa.
However, the company is still working to secure financing for the project.
Tellurian issued a limited notice to proceed to compatriot engineering and construction giant Bechtel in March 2022 and it said in August last year that Bechtel completed piling work for the first plant and also concrete pouring for all plant one compressor foundations.
The firm recently also secured more time from the US FERC to complete the construction of its Driftwood LNG project.
FERC said in a filling dated February 15 that both Driftwood LNG and the connecting pipeline have been granted an extension of time, until April 18, 2029.