NextDecade Subsidiary Rio Grande LNG Announces Issuance of $1.115 Billion Senior Secured Notes Due 2047

Rhea-AI Summary

NextDecade 's subsidiary Rio Grande LNG has announced the issuance of $1.115 billion in senior secured notes due 2047. These notes will accrue interest at a fixed rate of 6.58% and will be amortized over 18 years starting in September 2029. The proceeds will be used to reduce borrowings and commitments under existing term loan facilities for Phase 1 at the Rio Grande LNG Facility. This transaction brings the total refinanced amount to over $1.85 billion out of the original $11.1 billion Rio Grande LNG term loan facilities since a positive final investment decision was made in July 2023.

Positive

• Issuance of $1.115 billion in senior secured notes, improving liquidity.
• Fixed interest rate of 6.58%, providing predictable debt servicing costs.
• Refinanced a total of over $1.85 billion out of $11.1 billion term loan facilities, indicating progress in financial restructuring.

Negative

• The 18-year amortization period could extend financial obligations until 2047.

Financial Analyst

NextDecade Corporation's move to issue $1.115 billion in senior secured notes represents a strategic financial maneuver. The notes carry a fixed interest rate of 6.58% and are set for a long-term period until 2047. By using the proceeds to reduce existing borrowing under term loan facilities, the company aims to improve its financial stability and possibly obtain more favorable terms on future borrowings. The result could be seen as a positive step towards enhancing its debt management strategy.

However, investors should consider the implications of the interest rate. While fixed, 6.58% is relatively high, especially as debt will be amortized over 18 years starting in 2029. This long-term commitment means that the company is placing significant confidence in its long-term cash flow generation capabilities. It's important to monitor how well the company can service this debt over time while continuing its operations and growth plans.

For retail investors, understanding the significance of senior secured notes is important. These notes take priority over other debts in case of liquidation, providing some security to creditors but also indicating the company’s reliance on substantial borrowing to finance its projects. This move reflects a structured approach to managing the financial requirements of the large-scale Rio Grande LNG Facility project.

Market Research Analyst

The issuance of these senior secured notes by NextDecade aligns with the broader industry trends where LNG (Liquefied Natural Gas) projects often require substantial upfront capital investments. The Rio Grande LNG Facility, a major venture for the company, underscores its commitment to scaling up operations to meet growing energy demands. The refinancing of over $1.85 billion of the original $11.1 billion term loan facilities indicates ongoing efforts to optimize the capital structure. This can be seen positively as it spreads out financial liabilities and potentially mitigates risk.

From a market perspective, the steady demand for LNG, particularly given global energy transitions towards cleaner fuels, bodes well for projects like Rio Grande. The long-term nature of the notes matches the expected lifecycle of the facility, indicating a balanced approach to project financing. However, market conditions, such as LNG prices and geopolitical factors, will play a significant role in the project's success and, consequently, the company's ability to honor these long-term obligations.

Note proceeds will be utilized to reduce outstanding borrowings and commitments under existing Rio Grande LNG, LLC term loan facilities

HOUSTON--(BUSINESS WIRE)-- NextDecade Corporation (NextDecade or the Company) (NASDAQ: NEXT) announced today that its subsidiary Rio Grande LNG, LLC (Rio Grande LNG) has issued $1.115 billion of senior secured notes in a private placement. These senior secured notes will accrue interest at a fixed rate of 6.58%. Proceeds from the notes will be used to reduce outstanding borrowings and commitments under Rio Grande LNG’s existing term loan facilities for Phase 1 at the Rio Grande LNG Facility.

The senior secured notes will be amortized over a period of 18 years beginning in September 2029, with a final maturity in September 2047. The senior secured notes rank pari passu with Rio Grande LNG’s existing senior secured financings.

Including this transaction, the Company has now refinanced a total of over $1.85 billion of the original $11.1 billion Rio Grande LNG term loan facilities since a positive final investment decision was reached on Phase 1 at the Rio Grande LNG Facility in July 2023.

About NextDecade Corporation

NextDecade Corporation is an energy company accelerating the path to a net-zero future. Leading innovation in more sustainable LNG and carbon capture solutions, NextDecade is committed to providing the world access to cleaner energy. Through our subsidiaries Rio Grande LNG and NEXT Carbon Solutions, we are developing a 27 MTPA LNG export facility in South Texas along with one of the largest carbon capture and storage projects in North America. We are also working with third-party customers around the world to deploy our proprietary processes to lower the cost of carbon capture and storage and reduce CO₂ emissions at their industrial-scale facilities. NextDecade’s common stock is listed on the Nasdaq Stock Market under the symbol “NEXT.” NextDecade is headquartered in Houston, Texas. For more information, please visit www.next-decade.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of U.S. federal securities laws. The words “anticipate,” “contemplate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “would,” “could,” “should,” “can have,” “likely,” “continue,” “design,” “assume,” “budget,” “guidance,” “forecast,” and "target," and other words and terms of similar expressions are intended to identify forward-looking statements, and these statements may relate to the business of NextDecade and its subsidiaries. These statements have been based on assumptions and analysis made by NextDecade in light of current expectations, perceptions of historical trends, current conditions and projections about future events and trends and involve a number of known and unknown risks, which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements. Although NextDecade believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that the expectations will prove to be correct. NextDecade’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in NextDecade’s periodic reports that are filed with and available from the Securities and Exchange Commission. Additionally, any development of subsequent trains at the Rio Grande LNG Facility or CCS projects remains contingent upon execution of definitive commercial and financing agreements, securing all financing commitments and potential tax incentives, achieving other customary conditions and making a final investment decision to proceed. The forward-looking statements in this press release speak as of the date of this release. NextDecade may from time to time voluntarily update its prior forward-looking statements, however, it disclaims any commitment to do so except as required by securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240701606057/en/

Investors

Megan Light

mlight@next-decade.com

832-981-6583



Media

Susan Richardson

srichardson@next-decade.com

832-413-6400

Source: NextDecade Corporation

FAQ

What is the significance of NextDecade's $1.115 billion senior secured notes issuance?

NextDecade's $1.115 billion senior secured notes issuance aims to reduce outstanding borrowings and commitments under its existing Rio Grande LNG term loan facilities for Phase 1.

What interest rate will the $1.115 billion senior secured notes accrue?

The $1.115 billion senior secured notes will accrue interest at a fixed rate of 6.58%.

When will the amortization of NextDecade's senior secured notes begin?

The amortization of NextDecade's senior secured notes will begin in September 2029.

What is the final maturity date of NextDecade's $1.115 billion senior secured notes?

The final maturity date of NextDecade's $1.115 billion senior secured notes is September 2047.

How much of the Rio Grande LNG term loan facilities has NextDecade refinanced?

NextDecade has refinanced over $1.85 billion out of the original $11.1 billion Rio Grande LNG term loan facilities.