A US$2bn debt financing for liquefied natural gas infrastructure operator Energos Infrastructure has shifted to private credit after the company failed to attract sufficient demand at an acceptable rate from the broadly syndicated market, according to a source reports LPC.

The original package had included a US$500m first-lien term loan B and a concurrent US$1.5bn senior secured bond issue. The financing was slated to refinance the company’s capital structure, fund general corporate purposes, and support near-term capex for a project to convert a liquefied natural gas carrier into a floating storage and regasification unit (LNGC-to-FSRU).

Energos provides vessels and infrastructure that transport LNG and convert it back into gas for countries lacking regasification capabilities.

The company was formed in 2022 through a merger between Apollo and New Fortress Energy. Apollo took full ownership in 2024 after purchasing NFE’s remaining 20% stake.

Investors viewed the debt as risky because of Energos ties to New Fortress Energy, which Fitch Ratings analysts said in June could face leverage above 10x through 2027 and weaker cash flow expectations due in part to high interest costs.

“We had material credit concerns [about Energos] due to low credit quality New Fortress offtakes, a large portion of contracts coming up for renewal prior to our bonds maturing, high leverage and an aggressive sponsor,” said one investor who declined to participate.

Energos owns and operates 13 LNG vessels, eight of which are contracted to New Fortress Energy and generate about 40% of its Ebitda, according to an October 8 Fitch report.

Although those earnings are expected to remain largely insulated in a potential New Fortress bankruptcy, any filing by the Triple C-rated company could make it difficult for Energos to preserve all related Ebitda, the report said.

As a result of buyside pushback, the deal “could not get done in the public markets at a [pricing] level that made sense,” a source said. “The rates were approaching the high 9% to 10% range.” Private credit “offered an easy solution,” the source added.

At launch, the seven-year TLB had been offered at 425bp–450bp over SOFR with a 0% floor and a 98 OID. It included hard call protection of 102 in year one, 101 in year two, and par thereafter.

The senior secured notes carried a seven-year maturity and were non-call three.

Barclays had been lead-left arranger and administrative agent on the loan. Citigroup was lead-left on the bond and joint lead arranger on the loan with Credit Agricole. Apollo was the co-manager.

As volatility has persisted in broadly syndicated markets this year, private credit has repeatedly stepped into financings rejected by traditional leveraged investors.

In another recent example, direct lenders rescued the debt backing Canadian custom plastics components maker ABC Technologies’ acquisition of UK-listed TI Fluid Systems, after tariffs and ‘Liberation Day’ disruptions derailed its initial US$900m senior secured TLB launch earlier this year.
Source: Reuters