Not for the first time in recent months, liquefied natural gas (LNG) company Tellurian (TELL 7.71%) had a rough trading session on the stock market Thursday. It announced an amendment for a number of its debt facilities, which only served to remind investors of what a difficult state its finances are in. As a result, its share price took a more than 14% hit on a day when the S&P 500 index rose in excess of 2%.
Modification of two debt facilities
Tellurian disclosed in both a regulatory filing and a press release that it reached an agreement with an unnamed investor to amend the indentures (contracts, in other words) covering two issues of senior secured notes. Both notes mature in 2025; one carries a 10% coupon rate, and the other -- a convertible note that can morph into equity -- carries a 6% rate.
Under the terms of the agreement, Tellurian said, it will have a lower minimum cash balance requirement and will be able to make in-kind payments to satisfy interest owed the note holders.
Tellurian quoted its CEO Octavio Simoes as saying that the new arrangement "is pivotal toward establishing a sustainable capital structure and accelerating our strategic priority, Driftwood LNG."
"It also provides us the time and flexibility to complete the sale of our upstream assets in a manner that maximizes value for our shareholders while we maintain our focus on the intensive negotiations associated with the commercialization of Driftwood LNG," he added.
Drifting away?
Driftwood LNG, a monster project that has had more than its share of setbacks and delays, is a major concern of Tellurian and its investors.
While the modification of the terms covering the notes might have some positive aspects, it ultimately serves to illustrate the tough financial position the company remains in -- not to mention the status of the still-in-the-distance Driftwood LNG. Shareholders will be hoping for more substantially bullish financing news from Tellurian in the near future.
