We have our fingers on the pulse when it comes to distressed and restructuring – and we have a global team of specialized journalists and analysts to capture nuances other outlets can’t.

In the first of this interview series, we chat to Swapnil Sawant, senior distressed credit analyst, about an issuer that’s pulled out all the stops to avoid bankruptcy, and is still struggling with its debt: New Fortress Energy.

Hi Swapnil! Firstly, what does New Fortress Energy do?

New Fortress Energy, or NFE, is a gas-to-power energy infrastructure company that develops and operates natural gas liquefaction facilities, logistics infrastructure, and power generation plants across Mexico, Brazil, Puerto Rico, Nicaragua, and Jamaica.

NFE has been going through a refinancing, and a process to raise capital — can you give me a summary of the key events so far?

In 2024, NFE was in need of capital to deal with several tranches of debt that were due in 2025 and 2026, and to increase liquidity reserves to fund its growth. Almost all assets of the company were already encumbered, with the exception of its Brazilian assets.

To raise these required funds, NFE had to rely on these unencumbered Brazilian assets. These assets, however, were not wholly owned, so NFE came up with a creative method to collateralize them through a series of transactions in December 2024.

There were four parts to these transactions:

1. NFE issued new $1.2bn of senior secured notes to a group of supporting creditors holding a majority of each series of NFE’s existing secured notes.
2. $875m of the proceeds from these new notes were used in part to repay in full the $875m of 2025 secured notes outstanding.
3. NFE privately exchanged $1.4bn of its existing 2026 and 2029 secured notes held by supporting creditors into additional new notes with similar terms as those of the new $1.2bn senior secured notes.
4. The company raised $400m through the issuance of new class A common stock. Wes Edens, CEO, agreed to purchase shares of around $50m in this offering.

On the conclusion of the transaction, the company had pushed ahead or repurchased most of its near-term maturities and added close to $725m to its balance sheet, as shown below.

This series of transactions ultimately provided NFE with a runway to size up the EBITDA from its Brazilian entities to $1.1bn (by 2028 as per company estimates) from current $470m, thus allowing it to repay NFE’s massive debt pile over time efficiently.

What’s particularly interesting to you about NFE’s situation?

The series of transactions completed by NFE in December 2024 were one of the first instances of a “double dip plus” structure.

This was where the new money lenders had two separate pari claims against the existing credit group via a double-dip structure, and an additional claim against entities or assets that does not guarantee the existing credit group debt, aka the "plus".

A simplified illustration of NFE’s post-LME structure is presented below.

While the market was still decoding double dips and whether they would hold up in a bankruptcy, NFE went one step further.

It was able to get a not-fully owned valuable entity that was unencumbered and give an indirect control over it to lenders to get a deal done, thus creating two separate paths for lenders to get paid out on the money they loaned.

One path was a direct claim, based on the actual loan extended. The other was an indirect claim, which is created when the company uses the proceeds of the initial loan to extend a loan to an affiliate through an intercompany loan, as explained in the illustration above.

If there is any other case in the market, which has a similar construct of an unencumbered valuable subsidiary, it can easily replicate this structure and benefit from it.

Another problem this method solves is a getting around a strict merger covenant, since a company can use both unrestricted subsidiary capacity and non-guarantor restricted subsidiaries.

How did the distressed team get ahead of this information?

It was a team effort — the network that our journalists have, the expertise of our lawyers, and the analytical skills of the research team came together to decode this transaction.

This team of experts helps 9fin maintain an updated database of credit information and provide timely news on the latest happenings in distressed credit.

NFE was also covered extensively by 9fin’s leverage finance and high yield teams before this LME and before it came on the distressed team’s radar, ensuring continuous coverage on such names through various cycles. We relied on this coverage from our related teams to form an initial view, which was further developed by the distressed team.

The team worked together to break down the new structure and the finer details of the transaction. Further analyzing these facts, we simplified it for our readers and published an initial article on the 9fin platform, with another article providing further clarifications, exclusively for customers.

Working with the editorial team, the research team also contributed by estimating the cash on balance sheet post the transaction and the movement of the leverage ratio over the next few years. We also found out that the reduction of the leverage ratio largely depended on the Brazilian unit succeeding in its targets or the company raising funds from divestments (which NFE did ultimately carry out).

We continue to keep this on our internal watch list as NFE has a sizeable capital structure of close to $9bn which management will have to deal with again in 2028. Also because the completion of NFE’s ongoing projects will require further cash flow which can possibly lead to a follow up fund-raising effort.

What’s the draw for 9fin users on a situation like this?

9fin’s edge lies in its networks of experts that come together to provide timely and detailed view of such a new structure that are created regularly in the market. Using our analysis, users can study the legalities and complexities in such transactions and try to replicate them in their own portfolio companies.

The credit markets are different from the equity markets – in credit, something impacting one company can influence 20 other companies in its periphery. In the case of New Fortress Energy, their innovative LME will likely impact other companies, which will also try for a similar structure.

Alternatively, it can result in speculation from lenders, which impacts bond pricing. Every move is calculated, and thanks to 9fin’s coverage of this complex structure, customers could get ahead of that ripple effect.

How is it different to other refinancing stories we’ve covered?

This was a huge story, and the team was super excited to cover it, as it was the first time this structure was used. There have been stories about double dips and there have been stories about pari plus structures, but this transaction utilized a hybrid or combination of the two to the extent that even practitioners on the market were unsure what to make of it and call it.

9fin initially titled it a “triple dip” but ultimately, after offering our readers a back-to-basics on how all of these multiple-claim transactions began and evolved over time, decided it was more aptly named a double dip plus.

Although this level of critical analysis can be found in our articles across the platform, the way this transaction was structured was bespoke.

What exactly is a double dip plus structure?

When banks or lenders provide a loan to a company, they take guarantees or collateral of the assets the company owns. If the company is unable to pay back the loan, the lenders enforce their rights, take away the asset, sell it and reclaim the debt they had given.

That’s how they get assurance that their investment won’t be ‘wasted’.

‘Double dip’ emerged as a concept sometime in the last decade – new lenders made a loan to a non-guarantor entity and had two separate pari claims against the existing credit group’s assets as credit support for the new loan.

The two separate pari claims against the existing credit group were generally:

1. A direct claim—based on a secured guarantee by the existing credit group of the new money loan (Dip 1)
2. An indirect claim—via a secured intercompany loan made by the new money borrower to the existing credit group (Dip 2)

‘Dip 2’ was itself pledged (along with any other assets) by the non-guarantor entity in favor of the new money lenders.

The double dip offers double the protection against any potential financial stress that the company may undergo.

This was a standard within the industry, but the “double dip plus” has become somewhat widely discussed – same concept, but with an additional claim against entities or assets that do not guarantee the existing credit group debt.

Your overall debt is extremely protected, but equity holders never see that money, or never see the enterprise value get to them, because lenders have several claims on the asset.

Ultimately NFE’s new structure ended up being a double dip with a secured protection – more like an enhanced double dip, and still really notable in the industry.

What’s the impact of an impending recession on NFE?

All energy companies face similar challenges in a recession. For example, with oil, prices always fall during a recession – not because oil is becoming more effective, but because people aren’t buying as frequently.

When people don’t buy as frequently, demand drops. When demand drops, prices drop. When prices drop, margins get contracted. And when that happens, your debt becomes super difficult to service.

In this specific case, we’re in more of a partial recession than a full-fledged recession – to put it nicely! So, there’s no concrete guarantee that the demand will go down; we’re not dealing with regular economics, and there’s every chance that prices might actually increase, and go into a hyper-profit zone.

Generally, energy companies don’t perform well in recession, but only time will tell.

Final question – any recommended reading for people looking to learn more about New Fortress Energy, or anything we’ve discussed?

A few suggestions:

• Our coverage case study of NFE
• Our article on triple dips, and whether NFE’s LME qualifies
• Available on the 9fin platform: New Fortress Energy LME pulls off a ‘triple dip’
• Available on the 9fin platform: LME Summary — Retailers and manufacturers act on tariff concerns

Request a free trial of 9fin to access our full scope of NFE coverage — we’ll get you set up in minutes.