Bridge financing essential to keeping LNG Limited operating long enough to close an agreement to be taken over by a Singaporean investor fell through, which would imperil the company’s proposed Magnolia LNG export project in Louisiana, S&P Global Platts reports.
To blame are deteriorating market conditions due to the coronavirus pandemic, according to the Australian company. S&P Global Platts notes this latest development raises the potential for liquidation.
The health crisis has impacted trade flows and effectively shut off the ability of US developers to meet face to face with prospective customers in Asia and Europe to secure commercial agreements to support their projects. That has combined with an already challenging market environment that has been beset by low international prices and weaker-than-expected demand.
LNG Limited has enough cash to stay afloat until late April, but doesn’t expect the takeover to be consummated until May 28 at the earliest, CEO Greg Vesey said in a statement posted on the developer’s website Friday. The company is working with its suitor to help it secure new financing, but can’t be assured that effort will be successful, Vesey said.
“First Wall Street Capital Corp. has advised LNG Limited that it will not provide funds according to the terms of the legally binding secured convertible note subscription deed,” Vesey said. “LNG Limited has therefore terminated the deed and the security provided under that deed and reserves all of its rights against First Wall Street Capital Corp.”