US energy infrastructure company New Fortress Energy (NFE) and compatriot alternative asset manager Apollo have entered into a definitive purchase and contribution agreement to sell 11 LNG infrastructure vessels owned by NFE to a newly formed joint venture (JV) between funds managed by Apollo and NFE.
The JV, formed in a transaction valued at approximately $2 billion, will be owned approximately 80% by Apollo funds and 20% by NFE.
As described, the transaction will create a global marine infrastructure platform underpinned by long-term contracts, benefitting from NFE’s LNG downstream operations and developments activities as well as Apollo’s investment and maritime experience.
The JV provides critical infrastructure for the delivery, storage, and regasification of LNG to power countries around the world, which can reduce their reliance on oil and coal to lower carbon emissions while enabling potentially substantial cost savings, the partners said.
In addition to serving NFE’s projects globally, the JV also serves a diversified customer base of utilities and energy companies worldwide under third-party charters.
The 11-vessel portfolio to be sold to the JV consists of six floating storage and regasification units (FSRUs), two LNG carriers (LNGCs) and three floating storage units (FSUs).
The total implied enterprise value of the transaction is approximately $2 billion and NFE will receive approximately $1.1 billion in proceeds after accounting for NFE’s share of the JV and paydown of existing debt.
Furthermore, as part of the transaction, NFE has agreed to charter 10 of the 11 of the vessels from the JV for a period of up to 20 years commencing either upon close of the transaction or upon expiration of the vessels’ existing third-party charter agreements.
The JV will also seek growth opportunities in support of both NFE and third parties to support the energy transition and bolster energy security globally.
“Together with Apollo, we are creating a leading LNG marine infrastructure platform to help accelerate the energy transition while freeing up capital to continue to invest into our Fast LNG and downstream LNG projects worldwide”, said Wes Edens, Chairman and CEO of New Fortress Energy. “We are pleased to be partnering with Apollo in creating a maritime infrastructure company that will help support NFE’s growing LNG infrastructure needs going forward.”
Apollo Partner, Brad Fierstein, added: “Energy transition and energy reliability are global priorities and core to Apollo’s sustainable investing platform. We’re pleased to further these initiatives through this long-term investment alongside our JV partners at New Fortress Energy. This is a high-quality portfolio that increases energy security around the world, accelerates decarbonisation efforts, and facilitates LNG use which is cleaner and more affordable than diesel. We look forward to investing behind the platform’s growth to drive a more sustainable future.”
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