Executives from New Fortress Energy (NASDAQ:NFE) detailed a sweeping balance-sheet restructuring on an informational call, outlining a debt-for-equity exchange that will separate the company’s Brazil operations and significantly reduce corporate debt. CEO Wes Edens and an executive identified as Chris said the deal is governed by a restructuring support agreement (RSA) and is being implemented through a UK legal process designed to keep operations running without interruption.
UK restructuring plan and RSA framework
Edens said the company is pursuing a “consensual” restructuring using a UK process he referred to as the UK restructuring plan (UKRP), which allows creditors to exchange debt for a package of new securities while the business continues operating. He described the RSA as the “governing document” containing the material terms of the transaction, and said it was posted in the company’s 8-K.
Two-entity structure: BrazilCo and “new NFE”
Edens said the transaction’s first step separates “old NFE” into two entities: BrazilCo and a “new NFE.” BrazilCo will include the company’s terminals, power plants, and operations in Brazil and is expected to become a privately held company owned by creditor groups while continuing to be managed by existing management. The “new NFE” will remain publicly traded and retain the company’s remaining assets and operations, which management described as an integrated LNG-to-power business with a simplified, deleveraged capital structure.
Edens said that, in aggregate, corporate debt is expected to fall from about $5.7 billion pre-transaction to roughly $527 million after completion. He also said existing shareholders would own 35% of the new NFE following the restructuring, down from 100% previously, with the remaining 65% owned by new equity holders (creditors receiving equity through the exchange).
Management said the company expects the UK process to be completed in mid-2026, and that the post-transaction company is expected to have a newly formed independent board, while day-to-day management would remain with the current team.
Post-transaction capital structure and creditor consideration
Edens described a target leverage profile of 2–3x EBITDA and said the new structure is intended to be “very friendly” from a cash flow perspective. The new corporate debt is described as a five-year instrument with the ability to pay-in-kind (PIK) for the first 18 months. Beneath the term loan sits $2.5 billion of preferred equity held by creditor groups, with a coupon that starts at 3% in year one and steps up to 5% and 7% in years two and three, respectively. Edens said the preferred is “unequivocally equity,” includes a liquidation preference, is prepayable at par, and any amount still outstanding at maturity is mandatorily converted into common stock.
The company’s presentation also laid out how different creditor classes would be converted into the new securities, including allocations of new NFE debt, preferred equity, common equity, and in some cases equity in BrazilCo and interests tied to the FLNG 2 project (which management characterized as non-recourse to the company). Edens emphasized that existing equity holders would be diluted but would retain a “material stake” in a significantly deleveraged company.
Operational focus and cost actions tied to the restructuring
Chris said the company aimed to avoid Chapter 11, arguing it would have caused “serious destruction of value,” and credited employees, customers, vendors, and creditor groups for working toward the UKRP solution. He said unsecured creditors and critical vendors were “essential” in achieving the outcome.
Chris outlined several liability and expense actions negotiated over roughly seven months:
- Reduction of balance sheet obligations (accounts payable, accrued liabilities, or future capex commitments) by $286 million.
- Changes with vessel suppliers that he said would save over $330 million through reduced liabilities or the release of unnecessary vessels.
- Operating expense reductions of $55 million for the remainder of 2026, $70 million in 2027, and more than $200 million cumulatively in 2028 and beyond.
He said the company expects the UKRP process to take 60 to 120 days, alongside completing the Brazil spin-out and addressing regulatory and tax matters. He also said the company plans to brief rating agencies, vendors, governments, and research analysts on the restructured business.
Assets, supply portfolio, and growth initiatives discussed
Edens described the company’s remaining asset base as including LNG terminals in San Juan, Puerto Sandino (under development), and La Paz, along with related power assets and a liquefier that he said was performing at “record levels of production.” He said the company has 4 million tons of LNG supply: 1.5 million tons from Fast LNG One and two Venture Global contracts totaling 2.5 million tons. He said Fast LNG One has been operating since August 2024, and that the Plaquemines contract is expected to commence in January 2027, with CP2 expected two years later.
Management said the strategy is to match long-term supply with downstream offtake and capture a “net spread.” Edens said average contract life is about 13 years and cited an average net spread of $3.60.
Edens also highlighted three initiatives intended to increase matched demand and cash flows:
- Nicaragua terminal completion: He said commissioning is now expected in October 2026 following the transaction.
- Puerto Rico conversions: He cited completed conversion activity at Palo Seco and said regulators and the government have approved conversion of additional units and a pipeline connection to the terminal, with other plants conditionally approved and additional approvals expected later in the year.
- Turbine portfolio deployment: He said the company owns 10 TM2500 turbines and aims to lease them alongside gas supply agreements to drive incremental volumes.
In financial commentary, Chris said the company’s goal was to provide conservative cash flow expectations with transparency around assumptions. He discussed expected volume increases tied to Puerto Rico and conversion activity and said the company’s assumptions did not reflect “current elevated global prices,” noting potential upside from selling cargoes into higher-price conditions. He also said the company expects SG&A to decline from about $140 million run-rate (excluding deal expenses) to $100 million for 2027 and beyond, and that the assumptions presented result in about $400 million or better than $400 million of adjusted EBITDA for 2027 and beyond.
The company did not take questions on the call, with the operator stating management had been “alerted” that questions would not be taken.
About New Fortress Energy (NASDAQ:NFE)
New Fortress Energy is an integrated global energy infrastructure company focused on the development, construction and operation of natural gas-to-power projects and liquefied natural gas (LNG) terminals. The company sources LNG and delivers it via a network of floating storage and regasification units (FSRUs), onshore regasification terminals, and small-scale LNG carriers. By providing reliable natural gas supply solutions, New Fortress Energy aims to displace higher-carbon fuels in power generation, industrial and marine sectors.
The company’s core activities include the design, development and operation of FSRUs and onshore regasification terminals that convert cryogenic LNG back to gas for delivery into domestic transmission networks.
