SVP & CFO, Antoine Lafargue chats about our new hybrid financial model and the evolution of #financing in the LNG space during a #CHATwithTELL.
Customer is king
How the financial model has evolved from 100% equity to a hybrid model of debt and equity
• We are in an evolving industry
• Customers are relying increasingly on the spot market – less need for long-term contracts
• Finding out what is the right model for a low-cost commodity market
– Getting access to low-cost gas
– Low-cost liquefaction
– Cost of financing
• Customers back leveraging on their end
• Sovereign wealth funds / state owned enterprises
• Giving customers the choice on financing
Benefits of new model
• Convenience of syndicating to the larger group
• Offsets the incremental cost of servicing the debt
• We have put debt in the structure, but providing the LNG ‘at cost’ to customer
What do the economics look like
What do the economics look like when you have stressed that scenario with regards to the returns to the builder of the project and the customer. It becomes very difficult when you have to pay debt holders, preferred holders and equity holders – what does that look like?
• We are proposing a different model
• A few key variables:
– How much is the cost of the project
– Debt & equity
Banks finance two things…
Key criteria used by banks to evaluate credit capacity
• More innovation needed in industry
• Banks finance two things:
– Cash flow
• Can we have more equity financed by the customers themselves
… be continued.
#Tellurian was founded by #CharifSouki and #MartinHouston and is led by #President and #CEO #MegGentle. Tellurian intends to create value for shareholders by building a #low-cost, global natural gas business, profitably delivering natural gas to customers worldwide. Tellurian is developing a portfolio of natural gas production, LNG trading, and infrastructure that includes an ~ 27.6 mtpa LNG export facility and an associated pipeline. Tellurian is based in Houston, Texas, and its common stock is listed on the #Nasdaq Capital Market under the symbol “TELL”.
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