Global law firm White & Case LLP represented Freeport LNG Expansion, L.P. (Freeport LNG) and its subsidiaries FLNG Liquefaction, LLC (FLIQ1) and FLNG Liquefaction 2, LLC (FLIQ2) in the successful close and funding of the Freeport LNG multi-train natural gas liquefaction and export facility being constructed at Freeport LNG’s existing LNG regasification facility at Quintana Island near Freeport, Texas ("the Freeport Facility"). Total anticipated project costs, including financing costs, exceed US$9.64 billion.
Each of the debt facilities for Train 1 and Train 2 of the Freeport Facility was structured without completion support from the sponsors, making the combined debt financing the largest fully non-recourse construction project financing in history. With total committed debt and equity commitments (including for contingencies and cost overruns) in excess of US$11 billion, the financing was also the largest financing of any project on any basis in 2014.
White & Case effectively structured five distinct transactions in the combined financing, which were all closed and funded concurrently on November 25, 2014. First, White & Case represented Freeport LNG in a negotiated joint venture between Freeport LNG and Osaka Gas Co., Ltd. (Osaka Gas) and Chubu Electric Power Co., Inc. (Chubu Electric) in respect of Train 1 of the Freeport Facility. Pursuant to these arrangements, Osaka Gas and Chubu Electric will together acquire a 50 percent equity interest in FLIQ1 in consideration of up to US$1.24 billion of committed cash equity funding. Osaka Gas and Chubu Electric are also the offtakers of liquefaction services for the full committed capacity of Train 1.
Second, White & Case represented Freeport LNG in the US$4.369 billion export credit agency-supported debt financing of Train 1. The Train 1 debt financing is being provided by Japan Bank for International Cooperation (JBIC) through a direct loan, a loan insured by Nippon Export and Investment Insurance (NEXI) to be funded by The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited, Mitsubishi UFJ Trust and Banking Corporation and ING Bank N.V., Tokyo Branch, and certain uncovered working capital loans provided by such commercial banks. The Train 1 financing is the first LNG financing by JBIC and NEXI that did not include a completion guaranty and the largest JBIC financing in the United States to date.
Third, White & Case represented Freeport LNG in the competitively tendered auction for the cash equity investment in FLIQ2, which was won by Industry Funds Management (IFM). IFM was among five shortlisted infrastructure and private equity investors that ultimately bid for the right to invest over US$1.3 billion of Train 2 equity.
Fourth, White & Case represented Freeport LNG in the US$4.025 billion debt financing of Train 2. The Train 2 debt financing was structured as a seven-year mini-perm construction facility with an anticipated takeout in the capital markets. The Train 2 debt financing is being provided by a syndicate of 25 commercial banks. BP is the offtaker for the committed firm capacity of Train 2.
Finally, White & Case represented Freeport LNG in the structuring of a wide array of complex commercial arrangements among FLIQ1, FLIQ2 and the owners of subsequent liquefaction trains. These commercial arrangements underpin the integrated development of the Freeport Facility by FLIQ1, FLIQ2 and the owners of subsequent liquefaction trains and the mutualized production from the liquefaction trains upon completion.
White & Case developed many first-in-kind contractual arrangements across the various work streams, including joint funding arrangements to fully mitigate project-on-project risk and the first deal-contingent interest rate swap in any major project finance transaction, which locked in interest rates for the Train 2 debt many months prior to closing with no recourse to Freeport LNG or IFM. In addition, the innovative multi-borrower financing structure created a wide array of complex issues of first impression both within and between the various individual equity and debt financing structures that required highly bespoke structural mitigants.
"We are proud to have worked shoulder-to-shoulder with Freeport LNG and their financial advisor Macquarie Capital to structure this landmark financing," said partner Jason Webber, who leads White & Case’s multiple teams of lawyers. "The concurrent closing of the debt and equity financing of Train 1 and Train 2 was an enormous undertaking by all involved and demonstrates the incredible depth of our project finance team," added Clark Wohlferd, who was recently nominated for partner by the Firm.
The core White & Case team advising on the Freeport LNG transactions included Jason Webber, Clark Wohlferd, Amiko Sudo, Frank Schoen, Melinda Baglio, Alec Johnson, Hamad Al-Hoshan, Elijah Gjeltema, Cristian Blumm, Julia Bell, S. Alexandra De Padua, Diana Schawlowski, and Rohit Pothukuchi. The broader White & Case team also included Michael Shenberg, Sylvia Chin, Hazem Derhalli, David Thatch, Richard Burke, John Lillis, Daniel Hagan, Steven Ross, Jane Rueger, Marten Olsson, Katherine Spenner, Ian Silverbrand, Jason Goldstein, Rick Graham, Tanya Hanna and Kevin O’Neill.
White & Case is also representing Freeport LNG in the equity and debt financing of Train 3 of the Freeport Facility, which is expected to close in the second quarter of 2015. SK E&S and Toshiba are the offtakers for the committed firm capacity of Train 3.
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