Planned Sale of Oz LNGL Scrapped, New Deal Proposed

The previously-announced sale of Australia’s LNG Limited (LNGL) has been scrapped and a new deal involving only the US assets of the company has been launched, voluntary administrator PwC said May 26.

The business and assets of Bear Head LNG, LNGL’s proposed project in Nova Scotia, is not part of the new transaction. Ownership in that project will remain with entities controlled by LNGL.

Earlier this month, in the wake of the February collapse of a planned sale to Singapore’s LNG9 for US$75mn, LNGL said it had entered into a binding sale transaction with Global Energy Megatrend (GEM) for its US assets, at a price of US$2.25mn. On May 25, that transaction was terminated due to GEM’s inability to close the transaction within the required timeframe.

“Shortly thereafter, [LNGL] entered into a new transaction under which it has sold its interests in the US entities to another party, Magnolia LNG Holdings, LLC (Magnolia), for a cash price of US$2.0mn,” PwC said in a news release. “The Magnolia transaction was signed and closed on 26 May 2020.”

It is unclear whether Magnolia LNG Holdings is related in any way to Magnolia LNG LLC, the LNGL subsidiary which owns the Magnolia LNG project in Louisiana.

In addition to the cash purchase price, LNGL will receive an unsecured, non-interest bearing promissory note carrying an estimated value of about AU$2.0mn (US$1.3mn), payable if the Magnolia LNG project in Louisiana reaches financial close and a notice to proceed has been issued to begin construction.

As part of the Magnolia transaction, LNGL and Magnolia LNG Holdings have agreed to work together on a potential recapitalisation proposal for LNGL which, if it proceeds, will give Magnolia LNG Holdings the ability to pay out the AU$2.0mn promissory note by issuing existing LNGL shareholders additional shares in the recapitalised company.

If the recapitalisation proposal is not consummated by November 30, Magnolia LNG Holdings will pay a US$300,000 break fee to LNGL.