Freeport signs up Train 4 financing

Freeport LNG has reached a deal to raise $1.025 billion from Westbourne Capital and its partners. The cash will go to supporting a fourth train at the plant. A commissioning cargo from Freeport LNG’s Train 1 was exported on September 3. The announcement comes as Cheniere Energy Partners has increased the size of a notes offering to $1.5bn, from the proposed $1bn.

Freeport LNG said the Westbourne cash would combine with a bank loan to cover all of the capital required for the construction of Train 4, which will have nominal capacity of 5 million tonnes per year.

“We are happy to continue to progress our Train 4 expansion with an eye towards FID in the next several months,” said Freeport LNG’s chairman and CEO Michael Smith.

The company has received approval from the US Department of Energy (DoE) and the Federal Energy Regulatory Commission (FERC) for the additional train. It has signed a fixed-price engineering, procurement and construction (EPC) contract with KBR. The builder will oversee work through to commissioning and start up of the train.

Freeport LNG was set up in 2002, in Freeport, Texas, initially as an import project, starting in mid-2008 – at which point the impact of shale was beginning to make itself noticed. This led the project backers to rethink and introduce export plans.

The company filed its application with FERC in June 2017 for Train 4. At this point, it said it expected to begin construction by the end of 2018 and begin operations in 2022.

Noting the export of the commissioning cargo, Freeport LNG’s Smith said commercial operations at Train 1 were expected to start during September. The second train is expected to be in service in January 2020, while the third train should be in service in May 2020.

Cheniere, the leading light of US LNG exports, said it would scale up its $1bn notes offering to $1.5bn on the same day that Freeport LNG announced its Westbourne deal. The notes will mature in October 2029, with an interest rate of 4.5% per year. The offer is expected to close on September 12.

The company said it expected to use the proceeds to prepay the outstanding term loans under its senior secured credit facilities, which are due in 2024. The notes will also be used for general purposes, including the construction of Train 6 at Sabine Pass.

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