NextDecade’s subsidiary Rio Grande LNG (RGLNG) has secured $356m financing for a portion of Phase 1 of the Rio Grande LNG project in Brownsville, Texas.
The financing is being provided in the form of senior loans by a consortium of lenders under a credit agreement.
According to NextDecade, the senior loans were expended in one advance for the full amount. This led to a decrease in the outstanding commitments under RGLNG’s existing term loan facilities for Phase 1, reducing the amount from $11.1bn to less than $10.8bn.
The senior loans are set to mature in July 2033 and will accumulate interest at a fixed rate of 6.72%. They will hold an equal rank with RGLNG’s existing term loan facilities, the $500m working capital facility, and the $700m of 10-year senior notes issued at the final investment decision (FID) of Phase 1.
NextDecade said that the financing transaction is consistent with its long-term balance sheet strategy for Phase 1 of the 27 million tonnes per annum (MTPA) liquefied natural gas (LNG) project.
The strategy involves extending and staggering debt maturities, diversifying capital sources, gradually decreasing bank capital to create potential financing capacity for future LNG expansions, and mitigating interest rate risks.
As of the current date, RGLNG’s outstanding fixed-rate debt and executed interest rate swaps have effectively reduced its vulnerability to interest rate fluctuations, covering more than 80% of the projected debt required for Phase 1 construction, said NextDecade.
The FID on Phase 1 of the Rio Grande LNG export facility was taken in July 2023.
Phase 1 of the project involves the construction of three liquefaction trains with a combined nameplate capacity of 17.6MTPA. Two more trains are planned to be added subsequently.
At its full capacity, Rio Grande LNG will provide sufficient energy to heat and cool approximately 34 million American households on an annual basis.
