Publicly traded US LNG export firm Next Decade (Nasdaq: NEXT) has secured $50mm in additional funding. This apparent private investment in public entity (PIPE) to Next Decade should bring several benefits to the developer, not just funding. Several years ago, start up project company, Next Decade, was the first LNG project to reverse merge into a SPAC (Tellurian reverse merged into an existing public company). The term "SPAC" is an acronym for special purpose acquisition company whereby under the Securities Act of 1934 a management team (sponser) sets up a public company, staging it with significant investment capital, but with the limitation that it must have no previously identified target company (hence the nickname "blank check company"). Next Decade's (NEXT) reverse merger was, and continues to be unprecedented, especially because the late Ms. Eisbrenner and Next Decade's funders transitioned to a publicly traded company in the absence of any revenue or the establishment of guaranteed LNG offtake contracts.
The stock purchase by Abu Dhabi's Sovereign UAE Fund Mubadala, with US$229 billion assets under management, appears to be close to or at the publicly traded "market" price for NEXT. This play could not only be to fund Next Decade's initial project Rio Grande LNG until final investment decision (FID), but also to pre-position Rio Grande LNG for easier/cheaper project-level funding upon establishing FID. It could also perhaps strategically validate NEXT to enable future LNG offtake contracts beyond its SPA agreement with Shell LNG. Finally, it can't hurt that NEXT's $50mm investor is an Abu Dhabi UAE sovereign investment fund and there are local Middle East LNG import facilities; however, this deal is likely diluting NEXT current shareholders (York Capital, Valinor, others) in the process. Read this interesting press release by Next Decade: www.morganshields.com/blog
Rio Grande LNG Developer NextDecade Secures $50M From Abu Dhabi Investor
October 24, 2019
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Mubadala makes investment in leading LNG project developer adding to significant global energy portfolio
HOUSTON & ABU DHABI, United Arab Emirates--(BUSINESS WIRE)--Oct. 24, 2019-- NextDecade Corporation (NextDecade) (NASDAQ: NEXT) and Mubadala Investment Company (Mubadala), the Abu Dhabi-based sovereign investor, announced today that they have reached agreement for Mubadala to purchase US$50 million of NextDecade’s common stock in a private placement. NextDecade will issue the common stock to Mubadala at a price of US$6.27 per share.
Mubadala’s investment further strengthens NextDecade’s capital position as the company continues to develop its Rio Grande LNG project, the largest liquefied natural gas (LNG) export solution linking Permian Basin associated gas to the global LNG market.
“We are honored to welcome Mubadala, a leading global investor, as a shareholder in our company,” said Matt Schatzman, Chairman and Chief Executive Officer of NextDecade. “Mubadala brings a valuable perspective on large-scale infrastructure investment and the growing role of LNG in the Middle East and other markets around the world. We look forward to a strong and lasting partnership.”
Khalifa Al Romaithi, Mubadala’s Executive Director, Midstream, said, “We are pleased to make this investment in NextDecade. We strongly believe that the Rio Grande LNG project is optimally positioned to provide a highly competitive export route for the abundant gas resources of the Permian Basin and a compelling commercial proposition for LNG customers, Permian producers and NextDecade shareholders alike. Our investment also reflects Mubadala’s positive outlook on the global gas market and the growing role of gas in the energy transition.”
As part of its investment in NextDecade, Mubadala will receive one seat on NextDecade’s board of directors. Mubadala will also have the right to contribute a certain amount of project-level capital upon the final investment decision of NextDecade’s Rio Grande LNG project.
About NextDecade Corporation
NextDecade is a liquefied natural gas (LNG) development company focused on LNG export projects and associated pipelines in Texas. NextDecade intends to develop the largest LNG export solution linking Permian Basin associated gas to the global LNG market, creating value for producers, customers, and stockholders. Its portfolio of LNG projects includes the 27 mtpa Rio Grande LNG export facility in Brownsville, Texas and the 4.5 Bcf/d Rio Bravo Pipeline that would transport natural gas from the Agua Dulce area to Rio Grande LNG. NextDecade’s common stock is listed on the Nasdaq Stock Market under the symbol “NEXT.” NextDecade is headquartered in Houston, Texas. For more information, visit www.next-decade.com.
About Mubadala
Mubadala Investment Company is a sovereign investor managing a global portfolio, aimed at generating sustainable financial returns for its shareholder, the Government of Abu Dhabi.
Mubadala’s US$229 billion portfolio spans five continents with interests in multiple sectors including aerospace, ICT, semiconductors, metals and mining, renewable energy, oil and gas, petrochemicals, utilities, healthcare, real estate, pharmaceuticals and medical technology, agribusiness and a global portfolio of financial holdings across all asset classes. Mubadala has offices in Rio de Janeiro, Moscow, New York and San Francisco, with a joint venture in Hong Kong.
Mubadala is a trusted partner, an engaged shareholder and a responsible global company that is committed to world-class standards of governance. Reposted by Scott Shields Houston, Scott Shields Katy, www.morganshields.com