FLEX-IH Interest-Only Bonds
20th May 2021
DWPF provided model audit advice to Freeport LNG on the refinancing of FLEX-IH’s existing credit faciltiy with interest-only bonds.
FLEX Intermediate Holdco LLC (FLEX-IH) is a limited liability company that holds Freeport LNG Development L.P.’s (FLNG) ownership interests in each of its three liquefaction trains, FLIQ1 (50%), FLIQ2 (42.44%), and FLIQ3 (100%). Following a series of transactions (as part of the FLIQ3 refinancing strategy) in May 2018 and May 2020, FLEX-IH currently has approximately $1 billion outstanding under its commercial credit facility maturing in May 2023.
FLNG’s management team refinanced the existing credit facility with $1.251 billion of interest-only bonds with a final maturity in 2039. This amount includes transaction costs, hedging breakage costs, initial debt service reserve account (DSRA) and additional leverage. The increase in the debt amount due to hedging breakage costs will be compensated by a lower coupon rate on the new facility that will imply materially the same debt service.
The debt will be structured as a dual-tranche bond. The bond facility will comprise a $801.5 million tranche maturing in 2031 and a second tranche of up to $450 million with final maturity in 2039.