GIP acquires 25 % stake in Freeport LNG for $850m

Global Infrastructure Partners (GIP) announced yesterday that its second fund, Global Infrastructure Partners II, has agreed to acquire from a consortium of institutional investors managed by Hastings Funds Management (USA), Inc. and Zachry American Infrastructure, LLC an equity interest in Freeport LNG Development, L.P. (Freeport LNG), currently anticipated to be 25% at closing with no further ownership in Freeport LNG by the sellers.

The purchase price for the transaction is $850 million, subject to certain milestones and purchase price adjustments. Freeport LNG is developing a three-train liquefied natural gas (LNG) export facility at its existing LNG receiving and regasification facility on Quintana Island, near Freeport, Texas. The transaction is expected to close in the fourth quarter of 2014 (following financial closing for Trains 1 and 2 of the Freeport LNG facility).

Adebayo Ogunlesi, Chairman and Managing Partner of GIP said:

“GIP is excited about the opportunity to partner with Freeport LNG, a leading U.S. LNG developer and operator. As the energy revolution in the U.S. turns it into a major LNG exporter, Freeport LNG is one of a handful of projects at an advanced stage of development. GIP has worked closely with Freeport LNG's CEO Michael Smith and his experienced management team and we look forward to further developing our strategic relationship with Freeport LNG”.

Michael Smith, Chairman and CEO of Freeport LNG said:

“We are extremely pleased to welcome GIP, one of the world’s largest and most experienced infrastructure investors, to the Freeport LNG partnership. Over the past two years, we have developed a strong relationship with GIP. We are excited about adding GIP’s proven capabilities, industry knowledge and financial strength to Freeport LNG”.

Freeport LNG Development, L.P. has four limited partners:

(1) Freeport LNG Investments, LLLP, an entity owned by Michael S. Smith;

(2) ZHA FLNG Purchaser LLC, a Delaware limited liability company (Hastings Funds Management (USA), Inc. and Zachry American Infrastructure, LLC);

(3) Texas LNG Holdings, LLC, a wholly owned subsidiary of The Dow Chemical Company; and

(4) Turbo LNG, LLC, a wholly owned subsidiary of Osaka Gas Co., Ltd.

In December 2013, IFM Investors entered into an agreement to invest approximately $1.3 billion of equity required for the development of Freeport’s second facility (Train Two).