Liquefied Natural Gas Limited Launches ADRs To Tap U.S. Investor Interest

Jan. 19, 2014 6:54 PM ET

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Liquefied Natural Gas Limited's (ASX: LNG) Level 1 American Depositary Receipts have been quoted on the OTC International Platform to take advantage of interest from U.S. investors as it progresses its Magnolia LNG project in Louisiana.

Its ADRs will trade under the symbol "LNGLY" and will each represent 40 ordinary LNG Ltd shares.

"During 2013, the company promoted its 8Mtpa Magnolia LNG Project in Lake Charles to a range of US investment groups," managing director Maurice Brand said.

"A number of these parties participated in last month's Share Placement. We recognise there is strong interest to invest in the company from institutional, high‐net‐worth and retail investors in North America and a quotation on the OTC will provide the opportunity for these investors to trade conveniently and efficiently in their normal exchange trading hours.

"The Magnolia LNG project is moving towards being granted Filing status with the US Federal Energy Regulatory Commission and achievement of this milestone, with other commercial milestones, will materially increase the company's U.S. profile."

Deutsche Bank has been appointed as the exclusive depositary Bank for LNG Ltd's ADR program.

Magnolia LNG

LNG Ltd's Magnolia liquefied natural gas export project is planned as a four train LNG project located at the port of Lake Charles, Louisiana, and capable of producing up to 8 million tonnes of LNG per annum.

The project remains on track to submit an application to the US Federal Energy Regulatory Commission (FERC) for full filing status in March/April 2014 having filed its December 2013 Monthly Progress Report with the regulator.

Funding to progress all permits and environmental approvals required by FERC and all key commercial agreements during the 2014 calendar year is already in place with $10.85 million raised on 13 December 2013 through a placement.

Negotiations are continuing with a number of other parties to secure tolling arrangements for the
MLNG Project's remaining LNG production capacity. The company already has agreements in place for about three quarters of its capacity.

In addition, the project is in the advanced stage of selecting its preferred engineering, procurement and construction contractor as well as agreeing the terms of a definitive Precedent Agreement for the transportation of gas to the project.

Stonepeak Partners is earning an estimated 50% stake in Magnolia LNG return for contributing the full US$660 million project equity requirement.

This represents 30% of the total capital costs with LNG Limited planning to finance the remaining 70% with project debt.

To that end, the company has appointed BNP Paribas Bank as its project finance advisor.

It will also work with Stonepeak and New York based EAS Advisors, which had been instrumental in LNG lining up funding and partners for the project, to secure the proposed project debt financing for the Stage 1 development.

Analysis

LNG listing of its Level 1 ADR's on the OTC will leverage the very strong interest in the LNG sector in the U.S. as well as tap the interest from investors that have profited from U.S. listed LNG play, Cheniere Energy (NYSEMKT:LNG).

Cheniere was trading at around US$12 a share when it received Federal Energy Regulatory Commission approval for its Sabine Pass LNG export project in Cameron Parish, Louisiana, in April 2012 - the first of its kind in the United States in 50 years.

Since then, its shares have been on a upward trajectory to the current price of US$45.93.

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