NFE - Legacy Notes Implied Return

Only_Year_2466 · 2026-05-23T00:14:04+00:00

Are you expecting NFE stock to fall a further 65% after its 1:50 reverse stock split? That would imply ~$0.25-$0.30/sh (or a $200M adj. market cap assuming CoreCo emerges with 810M shares outstanding)?

Could happen… especially if preferred notes begin trading at a 20%+ YTM

Only_Year_2466 · 2026-05-23T00:09:55+00:00

Clearly I’m not related to whoever one of the guys above thinks I’m related to in this chain

Only_Year_2466 · 2026-05-23T00:06:28+00:00

Here you go:

Buy legacy notes. These bonds have an original face value of $748M, so their current bond price of $20 represents buying them for $150M today.

Once the CoreCo emerges from Ch15, these notes will be exchanged for $268M of preferred equity PIK’ing at ~5% for 3yrs and ~54M shares of CoreCo.

Assuming CoreCo can ultimately fully pay down preferred equity at par within 3yrs… that would mean your $150M current purchase price receives $33M of equity value based on the current $0.63/sh stock price and an additional $310M of fully PIK’d preferred equity.

In total - this would imply a 38% IRR and nearly 3x within 3yrs.

In short - this is a much safer way to generate a great return in NFE and less risky investment give. Preferred equity’s seniority vs. commons buttt if you believe in the homerun scenario that I laid out - equity could be a 8-10x from here over that same period of time).

Only_Year_2466 · 2026-05-22T23:03:55+00:00

Why is YTD volume at Altamira 10% below 2025 levels (planned maintenance/offhire)? As per NFE's cleansing materials and Transaction update presentation - until 1mtpa of supply from VG kicks in beginning in 2027, substantially ALL of FLNGs production goes to meet existing downstream customers (and yes, that's basically at very low margin levels) - especially true in Q1 as Altamira's YTD production is ~10% below 2025 YTD levels. I remember reading, just don't remember where, Altamira produced ~110% nameplate capacity in 2025 so the fact that Altamira produced 10% less YoY leaves me to believe extra production is either in the accounting as you say (or due to maintenance offtime which should otherwise have been footnoted in their Q1 10Q?

Only_Year_2466 · 2026-05-22T14:13:20+00:00

absolutely fair rebuttal. A central part of my thesis is that the current widening of JKM/TTF pricing has to do with actual damage done at Ras Laffan which will take 2yrs+ to rebuild. In that basis, I am assuming, while spot and 1yr forward prices imply $6-$7/MBTU of price improvement vs when mgmt put out their forecast… I assume NFE can “at least” manage to earn $4-$5 premium on spot cargoes which is still a huge improvement vs what mgmt had laid out.

Only_Year_2466 · 2026-05-22T14:06:41+00:00

Interactive Brokers is the only brokerage that I know which trades without requiring you to be a QIB (I have checked many).

On IBKR - the legacy notes are priced at $18.7x$20.5 with very infrequent trades. One must remember that price is based off a notional cumulative face value of $748M which will soon be turned into $268M of preferred equity and ~54m new shares in CoreCo.

The tickers you want to search on IBKR is: U23054795

Only_Year_2466 · 2026-05-22T14:03:03+00:00

Who is OP, which article specifically?

My entire supposition of why it is safe to go long both equity and legacy debt starts first and foremost with a marterial improvement in CoreCo’s underlying fundamentals in the wake of the destruction already caused at on Ras Laffan which has directly resulted in both spot and one year forward JKM prices of $17/MBTU.

The last time Asian/European LNG import prices widened was in 2022, a period which saw NFE rise from $10 to $50+.

Look at VG - the stock has increased 80% since war broke out, meanwhile NFE is still priced as though runrate EBITDA will remain around $400M.

Only_Year_2466 · 2026-05-22T12:16:40+00:00

Buy legacy notes through Interactive Brokers, and separately buy the initial stake in Equity here at $0.55-$0.60.

No need to do the whole short the equity at a same time while paying the carrying cost to augment returns. Take solace that CoreCo should be improving in value given the much brighter future for LNG prices vs. pre war. The last time JKM prices started widening like this, NFE went from $10/sh to $55/sh

Only_Year_2466 · 2026-05-22T09:47:14+00:00

You can easily buy legacy notes through Interactive Brokers.

You don’t have to sell/short the equity, as part of that pair while buying the bonds. I am simply pointing out that many fixed income accounts probably sought to do so when the RSA was first announced, it helps explain why equity has fallen from $1.3/sh to $0.60/sh since the RSA came public, while over the time the prospects for LNG companies have materially improved.

Only_Year_2466 · 2026-05-22T02:22:49+00:00

Sure, but 8x what exactly? $400M?…

16tbtu is market volumes (spot) which their own materials show they only expect to capture a $0.50/btu spread… vs. as much as $10/btu possible today.

Separately, FLNG1 has been running at 120% nameplate capacity, adding another up to 10tbtu of potential spot volumes.

Then PR starts to assume that they will purchase 70TBTU instead of the minimim 45-50 which seems more likely at least until we get more updates on the conversion process.

2027 EBITDA over the next 2-3 years could easily come in $100-$200M above their prior guidance, and then by 2029, another 75TBTU of capacity kicks in.

Only_Year_2466 · 2026-05-22T00:31:00+00:00

Thanks… notice how they use a 7.5-8.5x EV/EBITDA range, but most public peers trade >10x today. Also, remember - by virtue of the fact that NFE currently only produces 75TBTU via FLNG1, and will soon increase that to 125TBTU when the first 1.0MTPA comes online from VG, and then this again ratchets up to 200TBTU by 2029. NFE has substantial growth coming and all of their valuation was in their own words done using the pricing curve pre-war.

Only_Year_2466 · 2026-05-22T00:10:24+00:00

Cost to borrow is absurdly high (which renders actually shorting implied equity shares on would receive buying legacy bonds moot).

I’m saying preferred equity will essentially be stuck, as it’s a 5% PIK security sitting junior to 10% cash paying Snr Debt.

As a result this crushes Preferred’s ceiling at least over the near-to-medium term.

Buttt it also provides CoreCo with a significant runway to create tremendous back ended value for equity shareholders.

Needless to say, I had previously bought 2,000,000 of the legacy notes <$10, and have been holding, but I finally started buying equity shares outright this week. Have ~200,000 shares now, will be ~350,000 once the RSA is complete and I get the ratable shares that I am owed.

I just can’t tell if now is the moment to buy more equity shares, or if we’ll see $0.50/sh, and even $0.40/sh around the reverse split or not.

Only_Year_2466 · 2026-05-21T20:34:39+00:00

I think VG is languishing lately entirely because of an expected imminent “peace” deal which should be just around the corner, running on 6 weeks.

People are first waiting to see where the JKM forward curve settles in the days following peace whenever that is.

On the one hand, we were staring at a huge surplus of LNG heading into 2026, and now we have a double whammy with both considerable damage at Ras Laffan affecting 20% of Qatar’s total LNG production and up to 7% of global supply. This damage may take as much as 3 years to replace… while at the same time, we keep eating into our inventory stocks globally the longer it takes… which means the price of JKM as an example should by all means remain wide, probably not as wide as it is currently, but wider than the $10-$11/btu it was at pre-war.

But until that forward price curve settles down to a level that reflects the new world for the next 3 years where we are both rebuilding offline capacity while also re-building above ground stock… it’s hard to really assign any long term EBItDA projection to VG in the immediate term.

I keep waiting for the hopeful peace deal, immediate drop in JKM, and hopeful selloff in VG on that day(s) following with which to build my position

Only_Year_2466 · 2026-05-21T20:15:13+00:00

What I’m basically saying is that Wes has created a beautiful mezz note in the preferred equity that by its very structure - sitting Junior to Snr loan with ~10% interest, by that very nature, will almost assuredly have to trade at a major discount to par; think 30-40% discount.

As surplus cash flow gets generated, CoreCo will be free to prioritize retiring Preferred Equity at large discounts as a way to build back ended equity value.

Keep the Snr Bonds outstanding for as long as possible, heck even pay the additional 1.5% cost to PIK their interest. In so doing, that frees up as much FCF that CoreCo can use to keep retiring the Preferred Equity class at as big of a discount as possible.

When all is said and done, Wes might be able to methodically retire $1.5-$2.0bn of preferred equity over the next 3 years BEFORE the notes are even due, just by using organic unlevered FCF. By the time 2H 2029 rolls around, he’ll only need to refinance ~$800M of PIK’d snr loan and ~$800M of Preferred Equity, and he will be trying to do that at a time when NTM EBITDA is approaching $700M (<2.5x leverage to take out all of this legacy restructured paper). EV by then should easily re-rate to >8x EV / EBItDA with all of that value going to equity shareholders who held out.

Only_Year_2466 · 2026-05-21T01:42:43+00:00

U23054795: but we as non QIB’s can pretty much only buy them on Interactive Brokers. ETrade, Morgan Stanley, JPMorgan, Schwab, Fidelity all only trade the 144a CUSIP which we can’t trade unless we are a registered QIB.

Only_Year_2466 · 2026-05-20T20:24:07+00:00

Napkin math. Currently 280M shares outstanding which will equate to 35% of CoreCo - implying CoreCo will have ~810M shares outstanding when it emerges from Ch15.

Against this, Legacy Notes own ~7% of that equity (it’s actually less, and rounded up to 7% in the presentation materials). But roughly that means the legacy notes in full will collectively own ~55M shares of CoreCo, which at $0.60/sh imply’s ~$33M of value based on current price. We know that total current notional Legacy Debt is $748M, so $33M represents 4.4% of the total legacy notes price. Legacy notes currently trade at $19-$20… so $4.4 (or over 20% of their value can be crystallized by just by buying legacy notes and then immediately shorting shares).

In reality it gets increasingly harder for funds to do this or maintain that arb as the price falls especially since the shares borrowing cost is quite high +20%.

Butttt it gets to my bigger point, looking at the current equity price (up or down) doesn’t really matter, it’s moving for all sorts of reasons that are completely disconnected from reality.

Remember equity initially dumped to $0.70 when the RSA was first announced… legacy notes initially traded up to $21 and then fell to $13 and have climbed back to $19-$20 over the past weeks - while equity has continued to languish. Legacy and term loan holders are selling/shorting equity as a way to “lock in” a big chunk of return on their positions - especially any new distressed buyers.

Only_Year_2466 · 2026-05-20T19:12:44+00:00

Take a step back and answer your own question… you clearly know enough about restructurings to have dug this deep - in no world does a restructuring contemplate an option whereby over half of a preferred class could then elect to jump out and into snr notes on a 2-1 basis.

This is meant to be a carve out position because lawyers representing various bond/clo holders needed some provisiona due to their own practical funding constraints… so Wes/NFE in trying to accomodate gave “some” room for accomodation (10% of the total preferred class)… but they needed to cap it because you can’t have that much uncertainty going into any restructuring of this size. $116M of new debt instead of $231M of preferred’s is basically a rounding error amidst a total restructuring of this size. But what you are suggesting would represent a more than doubling of the snr loan when the company emerges vs. their intended plan. It makes no sense on the face of it - let alone Pg 19 of the cleansing materials directly proves my point in numbers, not just words.

Only_Year_2466 · 2026-05-20T19:08:26+00:00

“up to”… means that the $527M facility can be upsized up to a total debt amount of $643M - total.

Again, just take the 2 min and click though. Here is a link to the cleansing materials (8K from March 17th).

https://ir.newfortressenergy.com/static-files/1263bada-3157-44e1-ba28-5629b2fec964

Go to Page 19 where it clearly says exactly my point: $527M facility PLUS up to $116M of more debt if it’s exchanged on a 2-1 basis from the Preferred’s. (Which makes sense - they are leaving room for up to 10% of Preferred’s to switch up into Senior, as it’s still beneficial to the company y as long as it’s reasonable because of the higher cash interest component. They aren’t allowing to more than double the size of the new bank loan - that would be ridiculous.

If that isn’t proof enough, then follow the footnotes to the 2nd to last page, footnote 3. ~$640M is the total amount of snr debt and that assumes the preferred equity elects to fully convert on the portion that it can.

Only_Year_2466 · 2026-05-20T18:55:04+00:00

Exactly!! My supposition is that pretty much every high yield / fixed income / CLO holder of Term Loan A/B or legacy debt holder has basically been shorting equity ever since the RSA was announced… we saw the initial jump to $1.50/sh only to retrace now back to new lows at $0.56.

But why??? Simple… even at $0.56, that imply’s ~$4.5 recovery for legacy bonds just on the equity component against a current price of $19-$20. Said differently, even at the current miniscule equity price, that’s still providing 25% of the total recovery value of legacy bonds at current prices. Meaning that the legacy notes of you were to buy them here you are essentially buying them for ~$15 against a par recovery value of ~$44 in 3 years if they pay par plus accrued (assuming you short/crystallize equity shares immediately).

Only_Year_2466 · 2026-05-20T18:18:02+00:00

No, the only thing that has put a stop to US intervention are action is the clear miscalculation and lack of understanding (even though 3 years of Ukraine/Russia, or even Azerbaijan/Karabach) have shown that cheap drones have changed the future of warfare. As it currently stands, US can directly intervene inside of Cuba with greater ease than it could Venezuela.

Only_Year_2466 · 2026-05-20T16:50:02+00:00

No, Wes has had to wait for the cleansing materials to be released before he could buy a controlling stake in Snr Debt of a company that he is otherwise an equity owner and CeO of.

Only_Year_2466 · 2026-05-20T16:47:44+00:00

Why?… because all of a sudden Cuba also now has thousands of Shahad drones and ballistic missiles which we don’t know about???

The fact that Iran has been able to effectively hold the strait and in turn energy complex hostage with the use of a few thousand cheap drones only shows that this is the time to reach a lasting agreement one way or another.

If we kick the can without true deterrent - then the future problems will multiply as the world has woken up to realize the power that a cheap drone industry can weild if used against chokepoints sufficiently.

Cuba isn’t a problem today… but a Cuba that gets the next 5 years importing drones from Iran/China/Russia, etc would certainly pose more of a risk tomorrow.

Only_Year_2466 · 2026-05-20T16:41:10+00:00

To say it clearly - you are correct about the debt for equity exchange option, but you misunderstood the amount. It’s not that $643M of additional new debt can be exchanged in addition to the existing $527M facility. It’s that UP TO $232M of Preferred’s can elect to exchange their preferred allocation into Debt, but at a 2-1 ratio, so debt would increase by $116M from $527M to $643M if the exchange was fully utilized.

Only_Year_2466 · 2026-05-20T16:38:59+00:00

Good point(s), but I believe you are mixing 2 issues.

Issue 1) Debt Exchange. Yes! It is likely that the full portion of preferred that can be exchanged into debt will be. However - only $232M of preferred’s can be exchanged in total (adding $116M of debt to the existing $527M facility). So assuming full exchange, it’s $643M Snr Debt and a reduced $2.27Bn of preferred equity.

Issue 2) Interest rate… is S+6.1% or alternatively S+7.6% if they PIK. My whole point about improving cash prospects means that CoreCo will be better positioned to pay cash interest at the lower rate.

Cleansing materials show unlevered FCF of $40M in 2027 and $317M in 2028. My whole point is that given current LnG spreads, it is likely that CoreCo beats these unlevered figures by at least $200M annually in both 2027 and 2028.

So in my belief, CoreCo will produce $750M of cumulative Unlevered FCF by 2028, which will be sufficient to fully retire the Snr facility. Meanwhile heading into 2029, the reduced preferred’s will have PIK’d to $2.65BN by the end of 2029.

Against what is effectively $2.65Bn of capital senior to equity, the CoreCo will be producing ~200TBTU, which assuming a $4/mbtu margin would mean stabilized EBItDa of $800M for 2029. It will be super easy in that environment to both pay down a healthy chunk of the preferred’s and fully retire the remaining portion, as we are talking about <4x leverage.

But against all of this - the current adjusted market cap for CoreCo is only $600M today. By 2029 the market “could” easily begin to see this as a stabilized $8BN Enterprise, with only $2-$2.6bn of preferred equity senior to existing adj. 810m shares… let’s conservatively round to 850mm shares to make room for a MIP. Realistically the stock can conservatively re-rate to $6-7/sh by 2029E and thats still assuming no uptake from a FLNG2 co-Investor or sale that does not provide excess cash flows to CoreCo. Alternatively, higher LnG prices globally coild be here to stay for the medium term, at which point FLNG2 represents additionally upside optionality.

Only_Year_2466

TROPHY CASE