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Tellurian (NYSE:TELL) +9.3% pre-market Thursday after disclosing it entered into a binding letter of intent with an unnamed "New York-based institutional investor with ~$120B in assets under management" for the sale and leaseback of 800 acres to be used for the proposed Driftwood liquefied natural gas terminal facility in Louisiana.
The deal will consist of the sale of interests in the property to a special purpose entity to be formed by the investor for $1B and a 40-year lease from the purchaser to Driftwood LNG, Tellurian (TELL) disclosed in a Form 8-K.
Terms of the master lease will include an 8.75% capitalization rate and 3% annual rent escalators.
The Driftwood LNG project is planned to produce 27.6M metric tons/year of liquefied natural gas when ready.
Tellurian (TELL) is a "very speculative bet," and it looks "doubtful that [Chairman Charif] Souki will manage to raise the needed capital to build Driftwood LNG," Michael Wiggins de Oliveira writes in an analysis newly published on Seeking Alpha.