Shares of New Fortress Energy (NFE +3.18%) are soaring on Wednesday, up 11.1% as of 2:10 p.m. ET. The jump comes as the S&P 500 and Nasdaq Composite fell 1% and 1.5%, respectively.
Just weeks after finally securing final approval for its liquefied natural gas (LNG) supply contract from Puerto Rican regulators, the company announced today that it had reached another agreement with creditors to extend a forbearance period set to expire this week.
NASDAQ: NFE
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New Fortress Energy has some more breathing room
The embattled LNG provider has bought itself much-needed time, reaching a deal to extend its grace period through January 9th. This buys the company time to stabilize its cash flows, now that it has closed a deal that will net the company more than $3 billion over the next seven years.
Notably, this deal follows the rejection of a much larger, 15-year, $20 billion proposal from New Fortress earlier this year.
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Puerto Rico LNG deal offers a lifeline, but challenges remain
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 and the extended forbearance, 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.
