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Latham Advises NextDecade in the Largest Greenfield Energy Equity and Debt Project Financing in US History
July 12, 2023
Firm advises on the development and financing of the Rio Grande LNG Project.
NextDecade Corporation (NextDecade) (NASDAQ: NEXT) announced that it has taken its final investment decision (FID) with respect to the equity and debt financing of the first three liquefaction trains of its multi-train Rio Grande LNG Facility near Brownsville, Texas. This first phase, with nameplate liquefaction capacity of 17.6 MTPA, has 16.2 MTPA of long-term binding LNG sale and purchase agreements with TotalEnergies, Shell NA LNG LLC, ENN LNG (Singapore) Pte Ltd, Engie S.A., ExxonMobil LNG Asia Pacific, Guangdong Energy Group, China Gas Hongda Energy Trading Co., Galp Trading S.A. and Itochu Corporation. Bechtel is constructing the three-train first phase pursuant to fully wrapped lump-sum turnkey (LSTK) engineering, procurement, and construction agreements.
Latham & Watkins effectively structured more than half a dozen distinct transactions in the combined financing, which were all closed and funded concurrently on July 12, 2023. New York partner Hamad Al-Hoshan led the financing of a US$12.3 billion limited recourse debt financing, consisting of a US$10.8 billion commercial bank term loan A facility, a US$800 million commercial bank term loan A facility supported by credit support from TotalEnergies Holdings SAS, and a US$700 million in privately placed notes. New York partner Jason Webber led the formation of an equity consortium among NextDecade, Global Infrastructure Partners (GIP), TotalEnergies (NYSE: TTE), Singaporean sovereign wealth fund GIC, and Abu Dhabi sovereign wealth fund Mubadala with aggregate equity commitments of approximately US$6.2 billion. Houston partner Christopher Peponis led the development of more than a dozen complex and highly bespoke commercial agreements that collectively comprise the contractual architecture of the multi-owner multi-train Rio Grande LNG Facility.
The approximately US$18.5 billion in equity and debt commitments make this project financing the largest greenfield energy equity and non-recourse debt financing in the history of the United States.
As previously announced, Latham & Watkins also represented NextDecade in the private investment into public equity (PIPE) transaction by TotalEnergies into NextDecade, with the initial tranche funding on June 14, 2023, a second tranche funding concurrently with FID, and a third tranche to fund at a later date.
The team with respect to the bank financings and private placement included Mr. Al-Hoshan, San Diego partner Stephanie Fontanes, New York partner Michael Saliba, and associates Hyunjong (Josh) Ryu, Dominika Kovacicova, Yoon Lee, Matthew Powell, Tricia Duffy, Om Pandya, Paul Rafla, and Isabelle Sawhney. The corporate team with respect to the project-level equity consortium included Mr. Webber, and Houston associates Alice Parker, and Ben Marek, with advice on tax matters by Houston partner Jim Cole and associate Chelsea Muñoz-Patchen. The project development team included Mr. Peponis and associates Shawn Beloin, Julia Chen, Ikechukwu (Ike) Obioma*, Costanza Garcia, and Jack Klein. The corporate team with respect to the PIPE transaction was led by Houston partner Ryan Maierson, with associates Om Pandya, and Tasbiha Batool. Mr. Webber was the overall leader of the transactions and coordinated all aspects of the Firm’s representation. Advice on derivatives, regulatory, and transactional matters were led by New York partner Yvette Valdez, with associate Naffie Lamin.
*Admitted to practice in New York only.