Freeport LNG closes financing to construct third NG liquefaction train

Freeport LNG Expansion LP’s subsidiary, FLNG Liquefaction 3 LLC (FLIQ3), has closed on senior and mezzanine debt financing commitments of $4.56 billion in capital required for the construction of the third train of Freeport LNG's natural gas liquefaction and LNG loading facility on Quintana Island near Freeport, Texas.

The construction cost for the combined three-train project is expected to be $12.5 billion, including owner's costs and interest during construction. An additional $3 billion in funds were raised for refinancing and acquisition costs associated with the existing LNG import facility, letters of credit facilities, and a special contingency fund. 

With closing on financing, Freeport LNG has completed all milestones and issued a full notice to proceed to CB&I Inc., Zachry Industrial Inc., and Chiyoda International Corp. to construct the third train of the Freeport LNG liquefaction project. Full three-train operation is expected by the third quarter of 2019. LNG production from the first liquefaction train is expected in early 2018, with commercial operation of the first train expected to commence by the third quarter of 2018.

Approximately $3.64 billion in senior debt financing for the third train is being provided by a syndicate of 27 commercial banks under a seven-year mini-perm construction facility. Approximately $925 million in equity financing for the third train is being provided through mezzanine debt financing. Freeport LNG will retain 100% equity ownership in FLIQ3 and the third liquefaction train. FLIQ3 has entered into 20-year liquefaction tolling agreements totaling 4.4 million tonnes per annum with SK E&S LNG LLC and Toshiba Corp.

Macquarie Capital is serving as Freeport LNG's sole financial advisor with respect to the financing for the project. White & Case is serving as Freeport LNG's finance counsel. Twenty-seven project finance and investment banks are lending to the project, and Chadbourne & Parke served as lenders' counsel. Akin Gump Strauss Hauer & Feld represented SK E&S in the transaction. Toshiba Corp. is represented by Norton Rose Fulbright.

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