Shares of New Fortress Energy (NFE +12.14%) jumped today, finishing up 12.1%. The move came as the S&P 500 and Nasdaq Composite gained 0.1% and 0.3%, respectively.
The indebted liquified natural gas (LNG) company has secured final approval for a critical supply agreement in Puerto Rico after an arduous review process and months of negotiations.
NASDAQ: NFE
Key Data Points
Puerto Rico grants final approval
After markets closed on Thursday, the company announced that Puerto Rico's Financial Oversight and Management Board (FOMB) has given final approval for a seven-year supply contract worth more than $3 billion.
Earlier in the week, the FOMB had granted its conditional approval, and although the stock gained on the news, investors remained somewhat anxious until the conditions were met and final approval was secured, given the company's difficulties in satisfying the island's regulators.
The final deal is significantly more limited than New Fortress's original offer -- shorter and less lucrative. However, it couldn't come at a more critical time for New Fortress, which is teetering on the brink of bankruptcy. The signed contract should go a long way in keeping its creditors at bay.
New Fortress could avoid bankruptcy, but the threat still looms
Still, New Fortress is not out of the woods yet -- far from it. The company was forced to sell significant revenue-producing assets just to keep the lights on, and even with this contract, it will be difficult to get ahead of its debt. While a turnaround is certainly possible, investors should recognize that there is a good chance of being wiped out at this point.
