New Fortress Energy Faces 12.3% Drop Amid Restructuring Talks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Source: seekingalpha
- Restructuring Support Agreement: New Fortress Energy is negotiating a proposed restructuring support agreement with creditors, where creditors would receive preferred equity in a reorganized company, aiming to improve financial conditions and attract investor interest.
- Asset Control Transfer: Under the proposal, bondholders would gain control over New Fortress' assets in Brazil, while term loan lenders' recoveries would be tied to the value of the FLNG 1 LNG facility offshore Mexico, indicating significant adjustments in asset management.
- Cash Flow Pressure: The company faces increased financial strain due to delayed projects impacting cash flow, making the execution of the restructuring plan crucial for continued operations, although common shares will not be canceled, the terms of the agreement may change.
- Market Reaction: Following the restructuring news, New Fortress Energy's stock dropped 12.3% in early trading, reflecting market concerns over the company's financial health and uncertainty regarding future developments.
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Analyst Views on NFE
Wall Street analysts forecast NFE stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for NFE is 1.00 USD with a low forecast of 1.00 USD and a high forecast of 1.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
1 Analyst Rating
0 Buy
1 Hold
0 Sell
Hold
Current: 1.340
Low
1.00
Averages
1.00
High
1.00
Current: 1.340
Low
1.00
Averages
1.00
High
1.00
About NFE
New Fortress Energy Inc. is a global energy infrastructure company. The Company owns and operates natural gas and liquefied natural gas (LNG) infrastructure and an integrated fleet of ships and logistics assets to deliver turnkey energy solutions to global markets. Its segments include Terminals and Infrastructure, and Ships. The Terminals and Infrastructure segment includes the entire production and delivery chain from natural gas procurement and liquefaction to logistics, shipping, facilities and conversion or development of natural gas-fired power generation. The Company sources LNG from long-term supply agreements with third-party suppliers. The Terminals and Infrastructure segment includes all terminal operations in Puerto Rico, Mexico and Brazil, as well as vessels utilized in its terminal or logistics operations. The Ships segment includes certain vessels which are chartered under long-term arrangements to third parties and are part of the Energos Formation Transaction.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
New Fortress Energy Faces 12.3% Drop Amid Restructuring Talks
- Restructuring Support Agreement: New Fortress Energy is negotiating a proposed restructuring support agreement with creditors, where creditors would receive preferred equity in a reorganized company, aiming to improve financial conditions and attract investor interest.
- Asset Control Transfer: Under the proposal, bondholders would gain control over New Fortress' assets in Brazil, while term loan lenders' recoveries would be tied to the value of the FLNG 1 LNG facility offshore Mexico, indicating significant adjustments in asset management.
- Cash Flow Pressure: The company faces increased financial strain due to delayed projects impacting cash flow, making the execution of the restructuring plan crucial for continued operations, although common shares will not be canceled, the terms of the agreement may change.
- Market Reaction: Following the restructuring news, New Fortress Energy's stock dropped 12.3% in early trading, reflecting market concerns over the company's financial health and uncertainty regarding future developments.
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New Fortress Energy Secures $3.2 Billion Contract with Puerto Rico
- Contract Outlook: New Fortress Energy's seven-year contract with the Puerto Rican government is projected to generate $3.2 billion in revenue, averaging approximately $457 million annually, which, while not all profit, will significantly bolster the company's revenue base.
- Financial Challenges: Despite the new contract's potential to enhance revenue, New Fortress Energy's financial situation remains dire, with Q2 revenue reported at $301.7 million, a nearly 30% year-over-year decline, and most of this revenue allocated to servicing over $200 million in interest payments.
- Balance Sheet Condition: The company has total current assets of $1.48 billion against liabilities of $2.20 billion, indicating a precarious financial health that heavily relies on the Puerto Rico deal to sustain operations, posing significant risks.
- Market Performance: New Fortress Energy's stock has plummeted 93% this year and 98% over the past five years, starkly contrasting with the S&P 500's performance, highlighting its vulnerable position in the market.
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