Excellent commitment from Stonepeak. Speaks volumes about the...

Excellent commitment from Stonepeak. Speaks volumes about the project, the prospects of success and signing BTAs given they would be being updated about progress with potential customers. Clearly this is binding commitment from Funds managed by Stonepeak- investor money they may not be able to commit to other projects while committing to Maggy so there must be some confidence in project progress. It also removes the funding risk Magnolia had given we are now funded for the full 8mpta and not 4mpta like the previous deal.

Interesting that they have moved from the % equity in the project model we previously had to this mandatorily redeeming preference share model. Essentialy Stonepeak get a fixed rate coupon on their preference shares (set presumably to the IRR they want from the investment) with the preference share "debt" having to repaid starting from three years, at Magnolias election, but definitely by the end of 12 years. LNG maintain 100% of the project equity- but have this repayment funding requirement now (whereas before Stonepeaks "equity" was just that without any repayment condition). This could mean that LNG receives less project cashflow in the earlier years (say Yr 3-12) that would be used to fund Stonepeaks repayment schedule but 100% ownership over the tolling model over the back end of the project. Will have to see how this impacts valuations once I get a chance given senior debt is also being repaid down over 12 years, Maggy could refinance and pay back Stonepeak with further project senior debt at say 12 years which could be one strategy LNG is thinking about- much what Cheniere does with meeting its debt maturity profile.

I think this also opens up intriguingly more scope for equity participation from offtakers given it is a cleaner equity structure. In todays climate I think we need to be thinking hard about giving away some upside to lock away that bankable first customer given Meridien is not that customer.