New Fortress sued by investors

Natural gas supplier New Fortress Energy, NFE, is facing a class-action lawsuit over allegations that investors were misled by utterances regarding the company’s growth prospects.

The lawsuit comes amid a three-quarter decline in the value of the NFE stock, year to date, and a sevenfold increase in its debt to US$7.5 billion, relative to pre-pandemic levels. In 2019, NFE’s debt was around US$1 billion.

“Defendants created the false impression that they possessed reliable information pertaining to New Fortress’ projected revenue outlook and anticipated growth, while also minimising risk regarding New Fortress’ plan to have its Fast LNG projects fully operational and increase business growth globally,” said a release from US law firm Kessler Topaz Meltzer & Check LLP, which is representing investors.

The investors are concerned about the fall in the stock price.

“Those who suffered significant losses are encouraged to join the case, though participation is not required to recover potential damages,” the law firm noted.

Neither New Fortress nor its large local client Jamaica Public Service Company, nor the regulator, Office of Utilities Regulation, have so far responded to inquiries regarding the potential impact of the lawsuit on the LNG supplies to Jamaica. New Fortress is the sole supplier of LNG locally. And JPS is now mostly reliant on LNG to produce electricity for the national grid, which it operates under exclusive licence from the Jamaican government. Around two-thirds of the electricity grid is fuelled by natural gas.

New Fortress is American-owned but its operations began in Jamaica, where it launched into service as a supplier of LNG to JPS in 2016, then spread to other countries in the region.

The energy company has previously said that, over time, it plans to reduce its debt load by different means, including listing on the Brazilian market.

NFE now earns annual revenues of about US$2.4 billion. It holds capital of US$1.6 billion, which puts its debt at 450 per cent of its equity.

The market value of Nasdaq-listed NFE has also plummeted to US$2 billion, down from a peak of about US$9 billion reached during the period when the stock price had climbed to US$60 per share. Currently, the stock is hovering at US$9 to US$10.

steven.jackson@gleanerjm.com