The development of the LNG facility will involve the construction of three liquefaction plants, known as ‘trains’, at Quintana Island near Freeport, Texas. IFM Investors is providing the equity required for the development of the second train, Train Two.
Investment capital for Train Two will be derived from a consortium of project finance lenders and will be gradually drawn down over Train Two’s planned 51- to 54-month construction period.
The financial close of the transaction will likely occur in mid-2014, pending regulatory and other approvals.
“This project marks a unique opportunity for us to partner with a highly-experienced senior management team to invest in the rapidly developing LNG sector while maintaining a favourable risk/return profile for our investors,” said IFM Investors global head of infrastructure, Kyle Mangini.
Freeport LNG chief executive Michael Smith said the company was thrilled that such a well-regarded investment firm had chosen to invest in the Freeport LNG facility.
“This announcement clearly sends a signal to the financial community about our ability to fund the planned expansion and further solidifies our ability to move forward,” he said.
Freeport LNG has now awarded two contracts, both valued at around $2.5 billion to a joint venture between CB&I and Zachry Industrial for the construction of the first two trains.
Construction of the liquefaction project will commence once a receipt of authorisation is received from the US Federal Energy Regulatory Commission.
Freeport LNG believes construction will begin for the first two trains in mid-2014 and construction for the third liquefaction train is set to begin in the first quarter of 2015.
It is expected that the first train will begin operating 45 to 48 months from the start of construction and the second train six months later.
Freeport LNG has been approved by the US Department of Energy to export the volume of the three trains to any country with the capacity to import LNG and where the trade is permitted.
The minimum production capacity for the first and third liquefaction trains has been contracted under use-or-pay liquefaction tolling agreements with Osaka Gas, Chubu Electric Power Co, Toshiba and SK E&S LNG, LLC.
Freeport LNG has executed a 20-year use-or-pay tolling agreement with BP for the minimum production capacity of Train Two.
Macquarie Capital and Credit Suisse are acting as Freeport LNG’s financial advisors in regard to the financing of the project.
IFM Investors manages US$46 billion in assets for 30 major pension funds across infrastructure, debt, listed equities and private capital.
