1 month ago
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New Fortress Energy, NFE, supplier of the gas that fuel’s most of Jamaica’s electricity generation, is seeking partners to take on its local and regional assets.
The deal would see investors partnering to finance the entity with cheaper debt or take ownership in the regional assets.The hunt for partners comes as New Fortress seeks to rebalance its debt load while focusing on new markets, particularly in Brazil, Puerto Rico, and Mexico. The energy company’s debt load totals US$8.3 billion, more than four times its equity of US$1.8 billion as of September.
“In furtherance of these goals, the company has begun work to identify strategic partners for one or more of our primary businesses, including projects in Brazil, Puerto Rico, Jamaica, Mexico, Nicaragua, FLNG1, and Klondike,” New Fortress Chairman and CEO Wes Edens said on a recent investor call.
He described the initiative as part of an effort to unlock value, which he believes far exceeds NFE’s current debt and equity levels. Edens emphasised that many of New Fortress’ key assets, including those in Jamaica, Brazil, and Puerto Rico, are already operational, with long-term contracts in place and minimal need for additional capital expenditure. This operational maturity positions the assets as attractive infrastructure investments that generate steady cash flows without construction or commodity risks, he said.
“The characteristics of our businesses are, number one, they are fully constructed or will be shortly, like in Brazil. They have long-term committed customers and require little or no CapEx, which means the cash flows from operations go straight to the bottom line,” Edens noted.
Jamaica stands out as one of New Fortress’ most mature markets. The company’s Jamaican assets include an LNG supply operation that serves 25 customers through long-term agreements extending for two decades, as well as a power plant at the Jamalco complex in Clarendon, a floating natural gas vessel offshore Old Harbour, St Catherine, and a LNG storage facility in Montego Bay.
“Jamaica, our oldest and most mature asset, has long-term supply matching with customers, and it’s a very stable market with significant growth potential,” said Edens.
New Fortress reported revenue of US$567 million for the September 2024 quarter, up 10 per cent year on year. Quarterly, profit dropped from US$62 million to US$11.3 million.
“So even when we say Jamaica is a relatively small market relative to our overall business, [it represents] US$100 million-plus of long-term income. There’s nothing small about US$100 million for 17 years,” said Edens.
“I think that selling one or two assets, you could literally end up in a place where you’ve paid off all your corporate debt and you’re in a very, very different place as a company. Even selling one would rerate it,” Edens added. “So this is not a spurious exercise or one which we hope to try out. We are quite confident that we’re going to get great interest in these assets. So there’s a variety of different things we could do, and we’ll go pursue them and stay tuned. So that’s the basic plan,” he said.
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