8-K: Excelerate Energy to Acquire Jamaica LNG and Power Business from New Fortress Energy for $1.055 Billion

Excelerate Energy is set to acquire New Fortress Energy's Jamaica business for $1.055 billion, marking a significant step in its downstream growth strategy.

Summary

• Excelerate Energy has agreed to acquire New Fortress Energy's business in Jamaica for $1.055 billion in cash.
• The acquisition includes the Montego Bay LNG Terminal, the Old Harbour LNG Terminal, and the Clarendon combined heat and power (CHP) co-generation plant.
• Excelerate expects to assume all material contracts currently in place.
• The transaction is expected to close as early as the second quarter of 2025, pending regulatory approvals and customary closing conditions.
• The purchase price represents approximately 9x the Jamaica business's estimated 2025 adjusted EBITDA.
• Excelerate intends to fund the transaction through a combination of permanent financing and cash-on-hand, supported by an $850 million fully committed bridge facility.
• The acquired assets have a weighted average remaining contract duration of approximately 21 years including contract extensions.
• As of December 31, 2024, 86% of contracted revenue was Take-or-Pay, with a weighted average remaining tenor of approximately 13 years, representing approximately $2.9 billion of cumulative Take-or-Pay direct margin 2025 through 2039.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with a strategic acquisition that is expected to be accretive and enhance the company's financial profile. The long-term contracts and growth opportunities contribute to a favorable sentiment.

Positives

• The acquisition is expected to be immediately accretive to earnings per share.
• The acquired assets generate stable cash flows supported by attractive long-term contracts.
• The deal provides predictable long-term operating cash flows.
• The acquisition diversifies Excelerate's geographic and operational exposure.
• The transaction strengthens Excelerate's competitive position in the Atlantic basin natural gas market.
• There are potential organic growth opportunities, including LNG bunkering and expansion of the Clarendon CHP Plant.

Risks

• The transaction is subject to regulatory approvals and customary closing conditions.
• There are risks associated with obtaining financing and managing the acquisition.
• Unplanned issues, such as time delays, unforeseen expenses, and materials or labor shortages, could impact the transaction.
• Changes in the supply and demand for LNG and natural gas could affect the business.
• There are risks associated with conducting business in foreign countries, including political, legal, and economic risk.

Future Outlook

Excelerate anticipates expanding in Jamaica, leveraging existing infrastructure for LNG bunkering and expanding the Clarendon CHP Plant, while also growing LNG fuel supply for Jamaica's industrial base.

Management Comments

• Steven Kobos, President and Chief Executive Officer of Excelerate, stated that the transaction represents an important milestone in the execution of Excelerate's downstream growth strategy.
• Kobos also mentioned that the acquisition will expand and diversify their platform, positioning Excelerate as the key provider of essential LNG import infrastructure in a desirable and growing Atlantic basin natural gas market.
• Kobos added that the transaction enhances their financial profile, providing predictable, long-term cash flows at stable margins.

Industry Context

This acquisition positions Excelerate Energy as a key player in the Atlantic basin LNG market, particularly in Jamaica, where it will become the primary provider of LNG import infrastructure. This move aligns with the increasing global demand for LNG and the shift towards cleaner energy sources.

Comparison to Industry Standards

• The purchase price multiple of approximately 9x 2025E adjusted EBITDA is within the typical range for infrastructure-like assets in the energy sector.
• Comparable companies in the LNG and power generation space, such as Golar LNG, Flex LNG, and ContourGlobal, trade at similar EBITDA multiples depending on their growth prospects and contract profiles.
• The long-term Take-or-Pay contracts provide a stable revenue stream, similar to other contracted infrastructure assets like pipelines and toll roads.

Stakeholder Impact

• Shareholders are expected to benefit from the accretive nature of the acquisition and the potential for long-term value creation.
• Customers will continue to receive reliable LNG supply and power generation services.
• Employees of the acquired business will transition to Excelerate Energy.

Next Steps

• Obtain regulatory approvals for the transaction.
• Satisfy other customary closing conditions.
• Secure permanent financing to replace the bridge facility.
• Integrate the acquired assets and operations into Excelerate's existing business.
• Pursue potential organic growth opportunities in Jamaica.

Key Dates

Keywords

Excelerate Energy, New Fortress Energy, Jamaica, LNG, acquisition, downstream, power infrastructure, Montego Bay LNG Terminal, Old Harbour LNG Terminal, Clarendon CHP plant, Take-or-Pay contracts, Atlantic basin, financial profile, growth strategy