New Fortress Energy LLC Class A Stock

Good day, and welcome to the NFE Informational Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Kevin Sullivan, General Counsel. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining today's conference call, where we will discuss the transaction we announced yesterday. This call is being recorded and will be available by replay on the Investors section of our website under the subheading Events and Presentations. At the same location, you will find a presentation that we will walk through on today's call. Please review this as it includes important information on forward-looking statements and non-GAAP measures.

Now I'll hand it over to Wes Edens, our Chief Executive Officer.

Great. Great. Thanks, Kevin, and welcome, everybody. So I'm going to refer to the slide deck that we posted to our web page that hopefully you'll have in front of you. And myself and Chris will make some remarks to give you an update on the big news from yesterday.

So let's start on Page #3. The transaction we announced yesterday was a significant one. We completed a debt for equity exchange at NFE. The plan is a consensual one agreed to by our major counterparties on the debt side and eventually, we expect to be approved by our shareholders and is one of the most successful and largest consensual restructurings ever completed. This transaction utilizes a U.K. process called the U.K. RP that allows us to exchange debt for equity with our various creditors while continuing to run our company without interruption and most importantly, with no interruptions to our customer service.

So you can see on the bottom of the page, there's just 2 elements of it. One is the exchange the debt for the equity for other consideration, which I'll talk about in just a second. And the second, obviously, is it allows us to continue to run the company without interruption during this process.

So flip to the next page, please. What is the U.K. restructuring plan? It's a -- in simple terms, it's a consensual restructuring where the creditors agreed to exchange debt for a basket of other securities. The Restructuring Support Agreement, the RSA is the governing document. It is supported today by more than 50% of our existing creditors, and we expect it to be more than 75% by the time the process is complete. In fact, it's more than 75% on the majority of the classes now. The RSA is the governing document for this. It contains all the material terms as a source document of this transaction is posted in our 8-K, and hopefully, it will be clear and easy to understand and governs all elements of the transaction.

The Page #5, the actual mechanics of the transaction are detailed there. So the first step of the transaction was basically to separate out the company, the old NFE into 2 independent entities. BrazilCo and the New NFE. BrazilCo is comprised of the terminals, power plants and operations in Brazil. It becomes a private company at the culmination of this transaction and will continue to be managed by existing management and owned by creditor groups.

The New NFE will continue as a publicly traded integrated LNG to power company with all the existing assets and operations with a significantly simplified, stronger capital structure that's been greatly deleveraged. In the aggregate, NFE will have its corporate debt reduced from approximately $5.7 billion prior to this transaction to approximately $527 million. So obviously, a massive change in terms of the corporate structure. As you can see from the charts below, the transaction basically separates us into these 2 components, and that's what we expect to -- the company to look like upon completion of this.

As I said, the transaction involves the exchange, where creditors basically exchange their current debt for a basket of other securities. Generally speaking, the other securities are debt. Obviously, that's the $527 million versus the original $5.7 billion, preferred stock and common stock. I'll talk about these in some detail in the next few pages. In addition, some of the creditors will receive equity in the Brazil business, which will be separated as part of this process and become a stand-alone private company. Lastly, the current equity holders will continue to be significant shareholders of the New NFE.

Post this transaction, existing shareholders will own 35% of the New NFE. And while shareholders are greatly diluted through the issuance of new shares in this transaction, the capital structure is one now that has been greatly deleveraged and the company is now very well positioned for both stability and growth.

Turn to Page 6, please. So before we go further into the details, there's 5 key features of the transactions that are takeaways that I just would like to touch on. First is that BrazilCo, as I said, will be spun off and become an independently owned private company. Number two, the New NFE will own all the remaining assets and operations, continue to seamlessly provide LNG power and operations in all of our key markets. Number three, existing NFE creditors exchange their debt to this basket of securities, primarily debt, preferred equity and common shares.

Number four, the existing shareholders will be diluted from 100% to 35% post transaction and continue to be significant shareholders in New NFE. And the debt, as I said, is reduced by about 90% from $5.7 billion down to $527 million. Number five, is the company post restructuring is expected to have a newly formed independent Board of Directors and will continue to be managed on a day-to-day basis by existing management. And lastly, we expect the completion of the U.K. process to happen sometime in mid-2026.

Next page, on Page 7 is a picture of the capital structure. And you can see the highlights on the left-hand side here is, number one, low leverage, right? The target is 2 to 3x EBITDA, which is consistent with the investment-grade issuers. So a vastly improved leverage profile. Two is there's significant cash flow from the business. Growth is anticipated to deleverage and enhance equity value over time, and there's very little in the way of incremental CapEx to be spent in the business.

On the right-hand side are the pieces of the capital structure that are relevant here. On top of it, the NFE corporate debt, $527 million. It's 5-year debt. It's pick -- can be picked for the first 18 months. So it's very friendly in terms of cash flow profile of the company. Below it sits $2.5 billion in preferred equity that's owned by the different creditor groups. This is also a very friendly piece of paper in terms of the cash flow profile of it. The coupon in year 1 is 3%. It steps up if it's still outstanding in years 2 and 3, to 5% and 7%, respectively. There's a liquidation preference for it. So it is unequivocally equity, but it gives a significant amount of value to the creditors, who was a key part of the transaction. And then lastly, below it, you have 65% of the equity owned by new owners, 35% from existing holders. So very, very simple capital structure and the details of each of these pieces of equity and debt are detailed in the appendix.

The mechanics on Page 8 is -- this is an important page because -- basically, what it shows is that each of the different creditor groups, what they owned at the time of the transaction and what that gets converted into by this U.K. RP process. So this page is a critical one just in terms of understanding if you're a creditor or an equity holder, what the instruments were before the transaction and what they are post.

So you can see from the left-hand side, the 2029 bond class, $2.73 billion, they get $991 million of NFE preferred face value, 26% of the common equity and then 94% of the Brazil equity. Term Loan B, $1.266 billion gets $313 million in NFE debt, $708 million in preferred, 18% of the equity and then debt and preferred equity on our FLNG 2 project. This is nonrecourse debt and equity to the company, but basically, it gives value from that development directly to these classes that are shown here.

Term Loan A $295 million, NFE debt of $18 million, $128 million in preferred, 3% of the NFE equity, 2% to the Brazil equity and then $53 million and $27 million, respectively, of the FLNG2 debt and preferred. The legacy notes $748 million are allocated $268 million in preferred and 7% to the common equity. Lastly, the revolver, $660 million, gets $197 million in debt, $405 million in preferred, 11% of the common equity of NFE post transaction, 4% to the Brazil equity and $118 million and $59 million, respectively, of the FLNG2 debt.

And the bottom is it totals up across there, the $5.7 billion reduced to $527.5 million in NFE debt, $2.5 billion in preferred, 65% of the NFE equity, 100% of the Brazil equity and $400 million and $200 million. And lastly, the existing common stock gets -- goes from 100% to 35% of the company.

So if you could flip to Page #9, what does this mean for our most important counterparties? First and foremost, the customers and vendors greatly benefit from a strengthened balance sheet and certainty of uninterrupted service. Uninterrupted service is important in the energy business, generally speaking. It's never been more important than an energy crisis like we're going through now as a result of the activities in the Middle East. Second, the governments and regulators are tasked with ensuring dependable service both today and years to come. Rating agencies will now have a very strong balance sheet to evaluate and earnings profile to underwrite.

And perhaps most importantly, we'll have a company now with very modest development in process. We have built the infrastructure assets in our company on balance sheet over the last number of years, and there have been years and there's been multiple billions of dollars of capital invested. Those times are entirely behind us, and now we have very, very modest capital needs in order to complete the few projects that we've got. And the result is a simple net spread model, which combines long-term supply with long-term committed offtake, which results in a capital-light, free cash flow business, a very, very attractive business. The debt holders exchange their instruments for a basket of securities. This provides a diversified group of investments that we believe greatly enhances the value of their investment. And lastly, equity holders are diluted, but still on a material stake in the New NFE, which is greatly deleveraged and very well positioned as a stable and growing company.

Let me just turn it over to the next page to Chris to talk about the liabilities and operations.

Yes. Great. Thanks, Wes. Let me start by saying how proud I am to be part of the groups that came together to support this outcome. We do believe it's in the best interest of all stakeholders. A little bit of background before we talk about the liabilities. This all began last summer with the belief that while we had a number of financial challenges, some of them we caused some of them befell us, but that in all circumstances, given the nature of our business, the geographies of the governments we work with as well as the types of contracts that we were better served by avoiding Chapter 11, which would have resulted in serious destruction of value to all parties involved in the company.

So a quick recognition and thanks to 4 key groups in this process: first, our employees for their tenacity and resolve as they have been steadfast in their commitment to our customers; two, to our customers themselves who worked with us to ensure uninterrupted supply and support on contract amendments and extensions that demonstrated the value of the service NFE provides; three, our vendors and suppliers that realized while they didn't want to compromise what they were doing, they needed a healthy company that avoided bankruptcy in order to collect or ensure additional business going forward; and four, the creditor groups and their advisers, both legals, and FAs, while we certainly had difficult conversations, it was respectful and productive, and we believe we achieved the best possible outcome for the collective stakeholders of the company.

So on Page 10, over the last 7 months, we worked with our partners and critical vendors or preferred vendors to achieve the results that are described on the page. This page really speaks to why it was so important to the secured creditors to execute on these liabilities subject to compromise in order to solidify the rationale for the U.K. RP over a Chapter 11 process. The liability subject to compromise was critical as we agreed the U.K. process preserved significantly greater value, but also gave us some of the benefits that can be achieved in the Chapter 11 process.

To start, we knew that the secured creditors had all of the control, they were able to make the choice to send the company into bankruptcy or to work a solution that preserve more value. Once we convinced the secured creditors that the best option for value preservation was the U.K. RP, however, the unsecured creditors became essential. And to be honest, these unsecured -- these critical vendors and partners deserve all the credit. The company did its job to explain what the options were and what was being asked, but the unsecured creditors stepped up and really helped the company achieve this outcome.

As you can see on the page, we reduced balance sheet obligations, which is AP, accrued liabilities for future CapEx commitments by $286 million. And in addition, we worked with our vessel suppliers to reduce liabilities or release unnecessary vessels that will save us over $330 million. Critically, in the short term, this reduced the OpEx of the company by $55 million for the remainder of 2026, $70 million in 2027 and over $200 million cumulatively in 2028 and beyond. So in summary, this was undoubtedly a team effort to get a result that created the most value for all stakeholders. People didn't get exactly what they wanted nor what they were contractually entitled to, but they saw that there was an amazing underlying business here, which has tremendous potential, and they were willing to play the long game.

If I move to Page #11, this is a summary of kind of what Wes and I have both said. We signed the RSA with our creditors to reduce the corporate debt from $5.7 billion to $527 million. We secured agreements with our partners to reduce expenses. Both of those are critically important to the U.K. RP and why we chose that solution. And box three, results in a meaningful transaction that benefits our customers, investors and our company.

An ex-colleague and wonderful friend texted to me last night and said, this result really speaks to how solid the fundamental thesis of the firm is, absolutely the right idea and direction, just needed the right capital structure. If the thesis wasn't legit, a deal like this doesn't get done. And frankly, I think that sums it up quite well.

Moving to Page #12. You can see the process we expect from now through the completion of the U.K. RP. We will continue to work with our advisers from Houlihan, Skadden and Alvarez & Marsal, and our estimation is that the process can range from 60 to 120 days. We also need to complete the spinout of the Brazil business as well as a handful of regulatory and tax matters to streamline the go-forward business.

Over the coming weeks, we'll be reaching out to different stakeholder groups in order to ensure that they are fully briefed on the process and the resultant company and how well positioned it is for success. This includes the rating agencies to evidence our simplified structure, low leverage, predictable earnings stream, which will result in an improved credit quality. Vendors, now that we're relieved from our liquidity and leverage challenges, we're back to being a reliable counterparty. Governments that NFE will continue as a going concern, and we're just as dedicated as ever to providing affordable, cleaner power to places that need reliable electricity. And last to research analysts on both the debt and the equity side to re-underwrite the New NFE business model and provide clarity on the cash flows and earnings buildup going forward.

With that, I'll turn it back over to you, Wes.

Great. If you could just turn to the appendix now, and we can talk about what -- both in detail what the new NFE looks like, what do we own as equity shareholders and then how will we perform and how will we actually grow the business.

So on Page #14, there's a very simple schematic there, which shows the material assets of the company today. Obviously, we have terminals in San Juan; one under development in Puerto Sandino, Nicaragua; one that exists in La Paz. We have power plants that we both own and manage in each of those locations. And so that's what is there. From an equity standpoint, the way that I think of the transaction is what we own is basically a company where the debt has been reduced by a little over 90% from $5.7 billion to $527 million.

The equity has been diluted where previously we had essentially 100% of the equity that sat behind $5.7 billion in debt with a total cost in excess of 10%. That has now been changed dramatically, where it now sits behind a total of $527 million of debt, $2.5 billion of preferred stock that does not -- either of those pay current interest today and the average coupon of them in the first year is about 4%. So $5.7 billion going to $3 billion is the way to think of it. Total debt cost going or interest cost going from 10% down to 4%. So it basically gives us a very, very fair position to start with. And so while we are diluted, we're diluted in a much deleveraged capital structure and one that we think most importantly, has significant amounts of stability and can certainly grow.

The question of what the cash flows of the company, you look at the bottom is actually quite simple now. You have assets of the 3 LNG terminals, we have our power plants, our turbine portfolio. We have the liquefier, which is performing spectacularly well, record levels of production just yesterday. So the liquefier is great and the terminals are essential bits of infrastructure that are very, very important to those source markets.

The gas supply that I'll detail in a second, we have 1.5 million tons in liquefaction in the Fast LNG 1. We have 2.5 million tons of 20-year gas contracts for 4 million tons in total. Demand today with the existing contracts is approximately 125 TBtu. So 4 million tons is 200 TBtu, total demand of 125 TBtu. And so the simple goal is to match up long-term demand with that long-term supply and collect a net spread. Our contract life on average is 13 years. The average net spread today is $3.60. And so calculating what the earnings profile of the company is simply a matter of P times Q. It's the total price on the spread that we get times the quantity that we actually deliver.

So if you flip the page now to Page 15. The New NFE has this portfolio of 4 million tons of gas. The 1.5 million ton nameplate of the FLNG 1. It's been in operation since August of 2024. Our operational group has done a spectacular job of increasing the production of that unit and also increasing its reliability. So that's a very, very important cornerstone of the assets that we own. And then we have the 2 Venture Global contracts. The first, the Plaquemines contract is expected to commence operations in January of 2027, which matches up well with the incremental demand that we expect to see in the second half of this year. And then there's 1.5 million tons, which is expected 2 years later from Venture Global CP2. The goal is a simple one, is to fully utilize the supply with match downstream portfolio and collecting that spread.

Page 16. In addition to the current operations, we expect that earnings will be augmented in the future through 3 major initiatives. One is the completion of the Nicaragua terminal. The power plant is complete. The marine process is detailed, has certainty of time and money. We expect the commissioning of that terminal now post this transaction to be in October of 2026.

Number two, in Puerto Rico, which is a large downstream market for us, the largest, we have a significant amount of demand today from the power plants that we service. And there now is a significant amount of activity on the gas conversion opportunities. So you can see from the chart that's shown there, the first conversion was completed earlier this year on the Megagens, which are 3 turbines in Palo Seco. The regulatory bodies and the government has approved the conversion of Palo Seco 3 and 4 and approved the installation of a pipeline to connect that a short distance to our terminal.

There are 2 other power plants that are conditionally approved in Mayaguez and Cambalache. So about 200 megawatts in each case that are conditionally approved and we expect will be officially completed and approved here later this year. And then there's 2 that are other large plants that are priorities. San Juan 7 and 9, which is in our -- directly in the terminal is a near-term priority. It's one that we believe could be approved here in the very short term. And then Aguirre on the other side of the island. The third major initiative that we have is to deploy the turbine portfolio that we own.

Obviously, with all the demand for power worldwide led by the AI surge, there's a huge value in these turbines. We own 10 TM2500s. What's shown here in the photograph is the deployment of 10 of those in San Juan next to the terminal we have. Our goal basically is to lease these turbines in conjunction with the gas supply agreement. And so basically use them to anchor not only a leasing transaction, but also one that actually generates incremental business flow for us on the supply side.

The next page is details of financials. I'll turn that back over to Chris to run through that. Chris?

Yes. So obviously, the company has had challenges in its financial projections in the past. And our goal here is to show in a conservative way what our expected cash flows are for different periods, but perhaps more importantly, to ensure that investors have total transparency to the underlying assumptions so they can risk weight the expected outcomes.

As Wes has talked about already, our 2026 Puerto Rico volumes are running just right around 40 MTPA, slightly above it for the month of March on a run rate basis. But just around 40 MTPA for the first half of 2026, and we're expecting 50 or better for the second half of the year. And then this page kind of evidences that between kind of the Puerto Rico in the first section of the page and the Puerto Rico conversion. The second section of the page that our 2027 volumes there are increasing from 50 to 70. You can see the line that has Mexico volumes are relatively consistent from the third quarter of 2026 on an annualized basis through run rate and a high margin contribution.

We have market volumes in here, as you all will note, these numbers do not reflect current elevated global prices. So to the extent that you have volumes that are either already long or you can create long positions, we did this kind of on a pre-war basis, but there's a lot of value that can be gained by selling cargoes into the elevated market conditions that exist today.

And then moving down the page now with an appropriately capitalized balance sheet, we will refocus on the Nicaragua development and forecast it to begin commissioning late this year and contributing cash flow in 2027. And then obviously, the full year of run rate earnings from our turbine deployment opportunity that Wes has touched on results in our estimation of about $75 million on an annualized basis. These set of assumptions result in about $400 million, a little better than $400 million of adjusted EBITDA for 2027 and beyond. SG&A is expected to go from approximately $140 million per year of run rate that we're at now, excluding the deal and transaction-related expenses to $100 million for 2027 and beyond.

And then kind of at the bottom of the page, the goal is to say that if the company can execute on the 2027 objectives that we project, we will produce $415 million of adjusted EBITDA, which at a 10x multiple demonstrates there is genuine value to the common equity. Also, if we ran this forward, the company has a contract for an additional 20 years of supply for 1.5 MTPA a year or 75 incremental TBtus that's not shown on this page. We expect those volumes to come in later this decade. But on this, if we made somewhere in our average margin of $3 to $4 per MMBtu, that's $225 million to $300 million incremental EBITDA, which obviously was significant value to common shareholders.

There is some additional detail on some of the take-back securities in the appendix, but just to spend a quick minute on the pro forma capitalization of the company post the U.K. RP. Obviously, Brazil is excluded and no asset level or holdco debt remains. We're expecting the take-back debt of $528 million. The goal of the take-back debt quantum was to ensure that the company had very modest leverage, targeting under 2x for fiscal year 2027 earnings.

The debt is priced at a reasonable rate of just around 10%, which is relative -- reflective of a business of our credit quality and has the option to pick for 18 months for an additional 150 basis points if we choose. There can be some additional take-back debt up to $116 million to the extent that some preferred holders convert preferred equity into debt, and that's further explained in the 8-K we filed yesterday. This conversion would be at a 2:1 ratio.

Also from a liquidity standpoint, the company ended the year with $225 million in unrestricted cash on hand and has around $150 million cash on hand beginning this week. And as a result of the negotiations with the creditor groups, the company has agreed to size any new money needs based on a minimum liquidity requirement of $100 million. So if we needed additional liquidity, the company is committed to taking as much -- and the company is committed to taking as much as we require. We have access to $35 million on a [indiscernible] basis with the senior secured debt. And if necessary, we can access junior debt for any additional liquidity that is needed at closing to ensure we exceed these minimum cash requirements.

Finally, there's no other secured debt post the U.K. RP. We will have sold our TM2500s and retired the Stonebriar facility, and our CanAm loan guarantee has been released in exchange for an unsecured note payable back to the project. So this more efficient, well-capitalized company should be positioned for sustained growth and is laser-focused on execution to ensure the best possible result and recovery for those that have trusted us with their support and confidence.

Wes, back to you.

Great. Just to touch on the table, the key terms on the debt and preferred equity. I think it's worth talking about them for just a second. So the New NFE term loan is quite simple. It's $527 million. It's a 5-year instrument. It's basically interest in SOFR plus 6% and 8%. So it's eligible to defer current interest payments for up to 18 months. So a very, very straightforward instrument and very low leverage in the company in comparison to our earnings profile.

The NFE preferred equity is a key element of the transaction. And basically, it's $2.5 billion in total of capital that ends up with the creditors. It is a 3-year fully prepayable instrument that's prepayable at par. It has a coupon that escalates from 3% to 5% to 7%. And then at maturity, whatever portion of it that is still outstanding is mandatorily converted into common stock. The goal, obviously, from the company standpoint is to prepay it through a combination of equity cash flows, asset sales and equity or other debt raises over this period, but it's got a built-in instrument that basically gives us the time and the ability to continue to manage the business, grow the business. And therefore, take care of this loan before its maturity.

The major growth initiatives, which I detailed before, are worth just touching on. So they're very simple: number one, it's the Puerto Rican conversions; number two, is the completion of the Nicaragua terminal; and number three is the deployment of the turbine portfolio, all of which is underway. The goal from all of this is simply to increase the amount of matched demand with the existing supply that we have in our portfolio and grow our cash flows. That's the simple mantra of the business, and that's what we intend to focus on each and every day. And so as the year passes and we move ahead in the second half of the year, you'll see progress reports on each of these 3. All of these, we believe, will be completed this calendar year. So this is not initiatives that we think have a long life to them. In many cases, they've been underway for a number of years, and we're simply awaiting the completion of them. And if we're successful in doing that, we'll obviously increase cash flows. But you'll see with now a great deal of transparency as to what it is.

So with that, that's the end of our prepared remarks. We have a significant amount of disclosure, which is available to you. This deck, the press releases, the 8-K, obviously, the 10-K to follow. So all that is in the future. It's going to be a very busy time around here, the number of documents that have to get created to finalize the U.K. RP. But yesterday was a meaningful and important milestone for us in that we reached agreement on the RSA. That's the governing document for this. This allows us to now take this major step forward and to restructure the company.

The company basically is now -- will emerge from this as truly, a new company. The underlying businesses and activities are the same, but now the capital structure we have in place allows us to both have a stable platform to offer our services to our customers, and also, we think, grow the business as we just simply match the supply and demand of the terminals that we have in place.

So with that, I want to thank all of you for listening in. Obviously, if you have questions about this, you can forward them to myself and to Chris and to others here in the company, and we look forward to talking to you again soon. Thank you very much.

[Operator Instructions] I apologize, we've just been alerted that we will not be taking questions today. This concludes today's call. Thank you for your participation. You may now disconnect.

Good day, and welcome to the NFE Informational Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Kevin Sullivan, General Counsel. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining today's conference call, where we will discuss the transaction we announced yesterday. This call is being recorded and will be available by replay on the Investors section of our website under the subheading Events and Presentations. At the same location, you will find a presentation that we will walk through on today's call. Please review this as it includes important information on forward-looking statements and non-GAAP measures.

Now I'll hand it over to Wes Edens, our Chief Executive Officer.

Great. Great. Thanks, Kevin, and welcome, everybody. So I'm going to refer to the slide deck that we posted to our web page that hopefully you'll have in front of you. And myself and Chris will make some remarks to give you an update on the big news from yesterday.

So let's start on Page #3. The transaction we announced yesterday was a significant one. We completed a debt for equity exchange at NFE. The plan is a consensual one agreed to by our major counterparties on the debt side and eventually, we expect to be approved by our shareholders and is one of the most successful and largest consensual restructurings ever completed. This transaction utilizes a U.K. process called the U.K. RP that allows us to exchange debt for equity with our various creditors while continuing to run our company without interruption and most importantly, with no interruptions to our customer service.

So you can see on the bottom of the page, there's just 2 elements of it. One is the exchange the debt for the equity for other consideration, which I'll talk about in just a second. And the second, obviously, is it allows us to continue to run the company without interruption during this process.

So flip to the next page, please. What is the U.K. restructuring plan? It's a -- in simple terms, it's a consensual restructuring where the creditors agreed to exchange debt for a basket of other securities. The Restructuring Support Agreement, the RSA is the governing document. It is supported today by more than 50% of our existing creditors, and we expect it to be more than 75% by the time the process is complete. In fact, it's more than 75% on the majority of the classes now. The RSA is the governing document for this. It contains all the material terms as a source document of this transaction is posted in our 8-K, and hopefully, it will be clear and easy to understand and governs all elements of the transaction.

The Page #5, the actual mechanics of the transaction are detailed there. So the first step of the transaction was basically to separate out the company, the old NFE into 2 independent entities. BrazilCo and the New NFE. BrazilCo is comprised of the terminals, power plants and operations in Brazil. It becomes a private company at the culmination of this transaction and will continue to be managed by existing management and owned by creditor groups.

The New NFE will continue as a publicly traded integrated LNG to power company with all the existing assets and operations with a significantly simplified, stronger capital structure that's been greatly deleveraged. In the aggregate, NFE will have its corporate debt reduced from approximately $5.7 billion prior to this transaction to approximately $527 million. So obviously, a massive change in terms of the corporate structure. As you can see from the charts below, the transaction basically separates us into these 2 components, and that's what we expect to -- the company to look like upon completion of this.

As I said, the transaction involves the exchange, where creditors basically exchange their current debt for a basket of other securities. Generally speaking, the other securities are debt. Obviously, that's the $527 million versus the original $5.7 billion, preferred stock and common stock. I'll talk about these in some detail in the next few pages. In addition, some of the creditors will receive equity in the Brazil business, which will be separated as part of this process and become a stand-alone private company. Lastly, the current equity holders will continue to be significant shareholders of the New NFE.

Post this transaction, existing shareholders will own 35% of the New NFE. And while shareholders are greatly diluted through the issuance of new shares in this transaction, the capital structure is one now that has been greatly deleveraged and the company is now very well positioned for both stability and growth.

Turn to Page 6, please. So before we go further into the details, there's 5 key features of the transactions that are takeaways that I just would like to touch on. First is that BrazilCo, as I said, will be spun off and become an independently owned private company. Number two, the New NFE will own all the remaining assets and operations, continue to seamlessly provide LNG power and operations in all of our key markets. Number three, existing NFE creditors exchange their debt to this basket of securities, primarily debt, preferred equity and common shares.

Number four, the existing shareholders will be diluted from 100% to 35% post transaction and continue to be significant shareholders in New NFE. And the debt, as I said, is reduced by about 90% from $5.7 billion down to $527 million. Number five, is the company post restructuring is expected to have a newly formed independent Board of Directors and will continue to be managed on a day-to-day basis by existing management. And lastly, we expect the completion of the U.K. process to happen sometime in mid-2026.

Next page, on Page 7 is a picture of the capital structure. And you can see the highlights on the left-hand side here is, number one, low leverage, right? The target is 2 to 3x EBITDA, which is consistent with the investment-grade issuers. So a vastly improved leverage profile. Two is there's significant cash flow from the business. Growth is anticipated to deleverage and enhance equity value over time, and there's very little in the way of incremental CapEx to be spent in the business.

On the right-hand side are the pieces of the capital structure that are relevant here. On top of it, the NFE corporate debt, $527 million. It's 5-year debt. It's pick -- can be picked for the first 18 months. So it's very friendly in terms of cash flow profile of the company. Below it sits $2.5 billion in preferred equity that's owned by the different creditor groups. This is also a very friendly piece of paper in terms of the cash flow profile of it. The coupon in year 1 is 3%. It steps up if it's still outstanding in years 2 and 3, to 5% and 7%, respectively. There's a liquidation preference for it. So it is unequivocally equity, but it gives a significant amount of value to the creditors, who was a key part of the transaction. And then lastly, below it, you have 65% of the equity owned by new owners, 35% from existing holders. So very, very simple capital structure and the details of each of these pieces of equity and debt are detailed in the appendix.

The mechanics on Page 8 is -- this is an important page because -- basically, what it shows is that each of the different creditor groups, what they owned at the time of the transaction and what that gets converted into by this U.K. RP process. So this page is a critical one just in terms of understanding if you're a creditor or an equity holder, what the instruments were before the transaction and what they are post.

So you can see from the left-hand side, the 2029 bond class, $2.73 billion, they get $991 million of NFE preferred face value, 26% of the common equity and then 94% of the Brazil equity. Term Loan B, $1.266 billion gets $313 million in NFE debt, $708 million in preferred, 18% of the equity and then debt and preferred equity on our FLNG 2 project. This is nonrecourse debt and equity to the company, but basically, it gives value from that development directly to these classes that are shown here.

Term Loan A $295 million, NFE debt of $18 million, $128 million in preferred, 3% of the NFE equity, 2% to the Brazil equity and then $53 million and $27 million, respectively, of the FLNG2 debt and preferred. The legacy notes $748 million are allocated $268 million in preferred and 7% to the common equity. Lastly, the revolver, $660 million, gets $197 million in debt, $405 million in preferred, 11% of the common equity of NFE post transaction, 4% to the Brazil equity and $118 million and $59 million, respectively, of the FLNG2 debt.

And the bottom is it totals up across there, the $5.7 billion reduced to $527.5 million in NFE debt, $2.5 billion in preferred, 65% of the NFE equity, 100% of the Brazil equity and $400 million and $200 million. And lastly, the existing common stock gets -- goes from 100% to 35% of the company.

So if you could flip to Page #9, what does this mean for our most important counterparties? First and foremost, the customers and vendors greatly benefit from a strengthened balance sheet and certainty of uninterrupted service. Uninterrupted service is important in the energy business, generally speaking. It's never been more important than an energy crisis like we're going through now as a result of the activities in the Middle East. Second, the governments and regulators are tasked with ensuring dependable service both today and years to come. Rating agencies will now have a very strong balance sheet to evaluate and earnings profile to underwrite.

And perhaps most importantly, we'll have a company now with very modest development in process. We have built the infrastructure assets in our company on balance sheet over the last number of years, and there have been years and there's been multiple billions of dollars of capital invested. Those times are entirely behind us, and now we have very, very modest capital needs in order to complete the few projects that we've got. And the result is a simple net spread model, which combines long-term supply with long-term committed offtake, which results in a capital-light, free cash flow business, a very, very attractive business. The debt holders exchange their instruments for a basket of securities. This provides a diversified group of investments that we believe greatly enhances the value of their investment. And lastly, equity holders are diluted, but still on a material stake in the New NFE, which is greatly deleveraged and very well positioned as a stable and growing company.

Let me just turn it over to the next page to Chris to talk about the liabilities and operations.

Yes. Great. Thanks, Wes. Let me start by saying how proud I am to be part of the groups that came together to support this outcome. We do believe it's in the best interest of all stakeholders. A little bit of background before we talk about the liabilities. This all began last summer with the belief that while we had a number of financial challenges, some of them we caused some of them befell us, but that in all circumstances, given the nature of our business, the geographies of the governments we work with as well as the types of contracts that we were better served by avoiding Chapter 11, which would have resulted in serious destruction of value to all parties involved in the company.

So a quick recognition and thanks to 4 key groups in this process: first, our employees for their tenacity and resolve as they have been steadfast in their commitment to our customers; two, to our customers themselves who worked with us to ensure uninterrupted supply and support on contract amendments and extensions that demonstrated the value of the service NFE provides; three, our vendors and suppliers that realized while they didn't want to compromise what they were doing, they needed a healthy company that avoided bankruptcy in order to collect or ensure additional business going forward; and four, the creditor groups and their advisers, both legals, and FAs, while we certainly had difficult conversations, it was respectful and productive, and we believe we achieved the best possible outcome for the collective stakeholders of the company.

So on Page 10, over the last 7 months, we worked with our partners and critical vendors or preferred vendors to achieve the results that are described on the page. This page really speaks to why it was so important to the secured creditors to execute on these liabilities subject to compromise in order to solidify the rationale for the U.K. RP over a Chapter 11 process. The liability subject to compromise was critical as we agreed the U.K. process preserved significantly greater value, but also gave us some of the benefits that can be achieved in the Chapter 11 process.

To start, we knew that the secured creditors had all of the control, they were able to make the choice to send the company into bankruptcy or to work a solution that preserve more value. Once we convinced the secured creditors that the best option for value preservation was the U.K. RP, however, the unsecured creditors became essential. And to be honest, these unsecured -- these critical vendors and partners deserve all the credit. The company did its job to explain what the options were and what was being asked, but the unsecured creditors stepped up and really helped the company achieve this outcome.

As you can see on the page, we reduced balance sheet obligations, which is AP, accrued liabilities for future CapEx commitments by $286 million. And in addition, we worked with our vessel suppliers to reduce liabilities or release unnecessary vessels that will save us over $330 million. Critically, in the short term, this reduced the OpEx of the company by $55 million for the remainder of 2026, $70 million in 2027 and over $200 million cumulatively in 2028 and beyond. So in summary, this was undoubtedly a team effort to get a result that created the most value for all stakeholders. People didn't get exactly what they wanted nor what they were contractually entitled to, but they saw that there was an amazing underlying business here, which has tremendous potential, and they were willing to play the long game.

If I move to Page #11, this is a summary of kind of what Wes and I have both said. We signed the RSA with our creditors to reduce the corporate debt from $5.7 billion to $527 million. We secured agreements with our partners to reduce expenses. Both of those are critically important to the U.K. RP and why we chose that solution. And box three, results in a meaningful transaction that benefits our customers, investors and our company.

An ex-colleague and wonderful friend texted to me last night and said, this result really speaks to how solid the fundamental thesis of the firm is, absolutely the right idea and direction, just needed the right capital structure. If the thesis wasn't legit, a deal like this doesn't get done. And frankly, I think that sums it up quite well.

Moving to Page #12. You can see the process we expect from now through the completion of the U.K. RP. We will continue to work with our advisers from Houlihan, Skadden and Alvarez & Marsal, and our estimation is that the process can range from 60 to 120 days. We also need to complete the spinout of the Brazil business as well as a handful of regulatory and tax matters to streamline the go-forward business.

Over the coming weeks, we'll be reaching out to different stakeholder groups in order to ensure that they are fully briefed on the process and the resultant company and how well positioned it is for success. This includes the rating agencies to evidence our simplified structure, low leverage, predictable earnings stream, which will result in an improved credit quality. Vendors, now that we're relieved from our liquidity and leverage challenges, we're back to being a reliable counterparty. Governments that NFE will continue as a going concern, and we're just as dedicated as ever to providing affordable, cleaner power to places that need reliable electricity. And last to research analysts on both the debt and the equity side to re-underwrite the New NFE business model and provide clarity on the cash flows and earnings buildup going forward.

With that, I'll turn it back over to you, Wes.

Great. If you could just turn to the appendix now, and we can talk about what -- both in detail what the new NFE looks like, what do we own as equity shareholders and then how will we perform and how will we actually grow the business.

So on Page #14, there's a very simple schematic there, which shows the material assets of the company today. Obviously, we have terminals in San Juan; one under development in Puerto Sandino, Nicaragua; one that exists in La Paz. We have power plants that we both own and manage in each of those locations. And so that's what is there. From an equity standpoint, the way that I think of the transaction is what we own is basically a company where the debt has been reduced by a little over 90% from $5.7 billion to $527 million.

The equity has been diluted where previously we had essentially 100% of the equity that sat behind $5.7 billion in debt with a total cost in excess of 10%. That has now been changed dramatically, where it now sits behind a total of $527 million of debt, $2.5 billion of preferred stock that does not -- either of those pay current interest today and the average coupon of them in the first year is about 4%. So $5.7 billion going to $3 billion is the way to think of it. Total debt cost going or interest cost going from 10% down to 4%. So it basically gives us a very, very fair position to start with. And so while we are diluted, we're diluted in a much deleveraged capital structure and one that we think most importantly, has significant amounts of stability and can certainly grow.

The question of what the cash flows of the company, you look at the bottom is actually quite simple now. You have assets of the 3 LNG terminals, we have our power plants, our turbine portfolio. We have the liquefier, which is performing spectacularly well, record levels of production just yesterday. So the liquefier is great and the terminals are essential bits of infrastructure that are very, very important to those source markets.

The gas supply that I'll detail in a second, we have 1.5 million tons in liquefaction in the Fast LNG 1. We have 2.5 million tons of 20-year gas contracts for 4 million tons in total. Demand today with the existing contracts is approximately 125 TBtu. So 4 million tons is 200 TBtu, total demand of 125 TBtu. And so the simple goal is to match up long-term demand with that long-term supply and collect a net spread. Our contract life on average is 13 years. The average net spread today is $3.60. And so calculating what the earnings profile of the company is simply a matter of P times Q. It's the total price on the spread that we get times the quantity that we actually deliver.

So if you flip the page now to Page 15. The New NFE has this portfolio of 4 million tons of gas. The 1.5 million ton nameplate of the FLNG 1. It's been in operation since August of 2024. Our operational group has done a spectacular job of increasing the production of that unit and also increasing its reliability. So that's a very, very important cornerstone of the assets that we own. And then we have the 2 Venture Global contracts. The first, the Plaquemines contract is expected to commence operations in January of 2027, which matches up well with the incremental demand that we expect to see in the second half of this year. And then there's 1.5 million tons, which is expected 2 years later from Venture Global CP2. The goal is a simple one, is to fully utilize the supply with match downstream portfolio and collecting that spread.

Page 16. In addition to the current operations, we expect that earnings will be augmented in the future through 3 major initiatives. One is the completion of the Nicaragua terminal. The power plant is complete. The marine process is detailed, has certainty of time and money. We expect the commissioning of that terminal now post this transaction to be in October of 2026.

Number two, in Puerto Rico, which is a large downstream market for us, the largest, we have a significant amount of demand today from the power plants that we service. And there now is a significant amount of activity on the gas conversion opportunities. So you can see from the chart that's shown there, the first conversion was completed earlier this year on the Megagens, which are 3 turbines in Palo Seco. The regulatory bodies and the government has approved the conversion of Palo Seco 3 and 4 and approved the installation of a pipeline to connect that a short distance to our terminal.

There are 2 other power plants that are conditionally approved in Mayaguez and Cambalache. So about 200 megawatts in each case that are conditionally approved and we expect will be officially completed and approved here later this year. And then there's 2 that are other large plants that are priorities. San Juan 7 and 9, which is in our -- directly in the terminal is a near-term priority. It's one that we believe could be approved here in the very short term. And then Aguirre on the other side of the island. The third major initiative that we have is to deploy the turbine portfolio that we own.

Obviously, with all the demand for power worldwide led by the AI surge, there's a huge value in these turbines. We own 10 TM2500s. What's shown here in the photograph is the deployment of 10 of those in San Juan next to the terminal we have. Our goal basically is to lease these turbines in conjunction with the gas supply agreement. And so basically use them to anchor not only a leasing transaction, but also one that actually generates incremental business flow for us on the supply side.

The next page is details of financials. I'll turn that back over to Chris to run through that. Chris?

Yes. So obviously, the company has had challenges in its financial projections in the past. And our goal here is to show in a conservative way what our expected cash flows are for different periods, but perhaps more importantly, to ensure that investors have total transparency to the underlying assumptions so they can risk weight the expected outcomes.

As Wes has talked about already, our 2026 Puerto Rico volumes are running just right around 40 MTPA, slightly above it for the month of March on a run rate basis. But just around 40 MTPA for the first half of 2026, and we're expecting 50 or better for the second half of the year. And then this page kind of evidences that between kind of the Puerto Rico in the first section of the page and the Puerto Rico conversion. The second section of the page that our 2027 volumes there are increasing from 50 to 70. You can see the line that has Mexico volumes are relatively consistent from the third quarter of 2026 on an annualized basis through run rate and a high margin contribution.

We have market volumes in here, as you all will note, these numbers do not reflect current elevated global prices. So to the extent that you have volumes that are either already long or you can create long positions, we did this kind of on a pre-war basis, but there's a lot of value that can be gained by selling cargoes into the elevated market conditions that exist today.

And then moving down the page now with an appropriately capitalized balance sheet, we will refocus on the Nicaragua development and forecast it to begin commissioning late this year and contributing cash flow in 2027. And then obviously, the full year of run rate earnings from our turbine deployment opportunity that Wes has touched on results in our estimation of about $75 million on an annualized basis. These set of assumptions result in about $400 million, a little better than $400 million of adjusted EBITDA for 2027 and beyond. SG&A is expected to go from approximately $140 million per year of run rate that we're at now, excluding the deal and transaction-related expenses to $100 million for 2027 and beyond.

And then kind of at the bottom of the page, the goal is to say that if the company can execute on the 2027 objectives that we project, we will produce $415 million of adjusted EBITDA, which at a 10x multiple demonstrates there is genuine value to the common equity. Also, if we ran this forward, the company has a contract for an additional 20 years of supply for 1.5 MTPA a year or 75 incremental TBtus that's not shown on this page. We expect those volumes to come in later this decade. But on this, if we made somewhere in our average margin of $3 to $4 per MMBtu, that's $225 million to $300 million incremental EBITDA, which obviously was significant value to common shareholders.

There is some additional detail on some of the take-back securities in the appendix, but just to spend a quick minute on the pro forma capitalization of the company post the U.K. RP. Obviously, Brazil is excluded and no asset level or holdco debt remains. We're expecting the take-back debt of $528 million. The goal of the take-back debt quantum was to ensure that the company had very modest leverage, targeting under 2x for fiscal year 2027 earnings.

The debt is priced at a reasonable rate of just around 10%, which is relative -- reflective of a business of our credit quality and has the option to pick for 18 months for an additional 150 basis points if we choose. There can be some additional take-back debt up to $116 million to the extent that some preferred holders convert preferred equity into debt, and that's further explained in the 8-K we filed yesterday. This conversion would be at a 2:1 ratio.

Also from a liquidity standpoint, the company ended the year with $225 million in unrestricted cash on hand and has around $150 million cash on hand beginning this week. And as a result of the negotiations with the creditor groups, the company has agreed to size any new money needs based on a minimum liquidity requirement of $100 million. So if we needed additional liquidity, the company is committed to taking as much -- and the company is committed to taking as much as we require. We have access to $35 million on a [indiscernible] basis with the senior secured debt. And if necessary, we can access junior debt for any additional liquidity that is needed at closing to ensure we exceed these minimum cash requirements.

Finally, there's no other secured debt post the U.K. RP. We will have sold our TM2500s and retired the Stonebriar facility, and our CanAm loan guarantee has been released in exchange for an unsecured note payable back to the project. So this more efficient, well-capitalized company should be positioned for sustained growth and is laser-focused on execution to ensure the best possible result and recovery for those that have trusted us with their support and confidence.

Wes, back to you.

Great. Just to touch on the table, the key terms on the debt and preferred equity. I think it's worth talking about them for just a second. So the New NFE term loan is quite simple. It's $527 million. It's a 5-year instrument. It's basically interest in SOFR plus 6% and 8%. So it's eligible to defer current interest payments for up to 18 months. So a very, very straightforward instrument and very low leverage in the company in comparison to our earnings profile.

The NFE preferred equity is a key element of the transaction. And basically, it's $2.5 billion in total of capital that ends up with the creditors. It is a 3-year fully prepayable instrument that's prepayable at par. It has a coupon that escalates from 3% to 5% to 7%. And then at maturity, whatever portion of it that is still outstanding is mandatorily converted into common stock. The goal, obviously, from the company standpoint is to prepay it through a combination of equity cash flows, asset sales and equity or other debt raises over this period, but it's got a built-in instrument that basically gives us the time and the ability to continue to manage the business, grow the business. And therefore, take care of this loan before its maturity.

The major growth initiatives, which I detailed before, are worth just touching on. So they're very simple: number one, it's the Puerto Rican conversions; number two, is the completion of the Nicaragua terminal; and number three is the deployment of the turbine portfolio, all of which is underway. The goal from all of this is simply to increase the amount of matched demand with the existing supply that we have in our portfolio and grow our cash flows. That's the simple mantra of the business, and that's what we intend to focus on each and every day. And so as the year passes and we move ahead in the second half of the year, you'll see progress reports on each of these 3. All of these, we believe, will be completed this calendar year. So this is not initiatives that we think have a long life to them. In many cases, they've been underway for a number of years, and we're simply awaiting the completion of them. And if we're successful in doing that, we'll obviously increase cash flows. But you'll see with now a great deal of transparency as to what it is.

So with that, that's the end of our prepared remarks. We have a significant amount of disclosure, which is available to you. This deck, the press releases, the 8-K, obviously, the 10-K to follow. So all that is in the future. It's going to be a very busy time around here, the number of documents that have to get created to finalize the U.K. RP. But yesterday was a meaningful and important milestone for us in that we reached agreement on the RSA. That's the governing document for this. This allows us to now take this major step forward and to restructure the company.

The company basically is now -- will emerge from this as truly, a new company. The underlying businesses and activities are the same, but now the capital structure we have in place allows us to both have a stable platform to offer our services to our customers, and also, we think, grow the business as we just simply match the supply and demand of the terminals that we have in place.

So with that, I want to thank all of you for listening in. Obviously, if you have questions about this, you can forward them to myself and to Chris and to others here in the company, and we look forward to talking to you again soon. Thank you very much.

[Operator Instructions] I apologize, we've just been alerted that we will not be taking questions today. This concludes today's call. Thank you for your participation. You may now disconnect.