PricewaterhouseCoopers, the appointed administrators for Liquefied Natural Gas Ltd. (LNGL), Sydney, has terminated the sale of the proposed Magnolia LNG project to Global Energy Megatrend Ltd. (GEM), London, and closed a new deal (OGJ Online, May 12, 2020).
Magnolia LNG Holdings LLC (MLH) signed and closed a $2 million cash deal May 26. The GEM deal, terminated for not closing within the required timeframe (May 15), was for $2.25 million.
As was the deal agreed with GEM, the new transaction is for the sale of LNG Ltd.’s subsidiaries that own and operate the Magnolia project, an LNG export terminal at Port of Lake Charles, La. These include Pecan Inc., LNG Management Services LLC, and LNG Technology LLC.
As before, the transaction does not include LNGL’s interest in the business and assets of the proposed 8 million tonnes/year Bear Head LNG project in Nova Scotia. Also, LNGL’s patented optimized single mixed refrigerant liquefaction process technology is to be sold as part of the deal, but the Bear Head project will retain a perpetual license to use the technology.
In addition to the cash purchase price paid by MLH, LNGL will receive an unsecured, non-interest-bearing promissory note issued by MLH worth $2 million (Aus.). This note is payable if the Magnolia LNG project reaches financial close and a notice to proceed has been issued for the start of construction.
As part of the new deal, LNGL and MLH have also agreed to work together on a non-exclusive basis towards a potential recapitalization proposal for LNGL. If MLH and the administrator (on behalf of LNGL) enter into a Deed of Company Arrangement in respect of this recapitalization, but the terms of the proposal are not consummated by Nov. 30, MLH will pay LNGL a break fee of $300,000. If the recapitalization proceeds, MLH can pay out the note by issuing existing shareholders in LNGL with additional shares in the recapitalized company to the value of the note.
The Magnolia LNG proposal is for a plant with up to 4 LNG trains, each with a production capacity of 2.2 million tpy.