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Mail Stop 3561
September
14, 2018
Wesley R. Edens
Chief Executive Officer
NFE Financial Holdings LLC
111 W. 19th Street, 8th Floor
New York, NY 10011
Re: NFE Financial Holdings LLC
Draft Registration Statement on Form S-1
Submitted August 16, 2018
CIK No. 000179723
Dear Mr. Edens:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
General
1. Please supplementally provide us with copies of all written
communications, as defined
in Rule 405 under the Securities Act, that you, or anyone
authorized to do so on your
behalf, present to potential investors in reliance on Section
5(d) of the Securities Act,
whether or not they retain copies of the communications.
Prospectus Cover Page
2. Include the concise list of applicable bulleted statements
Section II.A.3.a of Release No.
33-6900 requires for limited partnerships and similar entities.
Wesley R. Edens
NFE Financial Holdings LLC
September 14, 2018
Page 2
Summary
3. Throughout your summary and your prospectus, you refer to the
implementation of
"more stringent environmental regulations" and how these regulations may
benefit your
business. Please revise your disclosure to specify the regulations to
which you are
making reference and clarify the status of these regulations.
Pennsylvania Facility, page 3
4. Please revise to quantify the obligations associated with the
"substantial portion of your
expected gas needs" for which you have already contracted and summarize
the conditions
precedent.
Our Current Downstream Customers, page 3
5. Disclose the capacity at which your assets are currently operating to
service JPS and
provide additional capacity disclosure to put in context your statement
that these assets
"will have capacity to service" JPC and Jamalco, as well as other
customers.
Business Strategies, page 4
6. Revise this section to clearly depict your current revenue-generating
operations as
contrasted with your operations that are currently under development and
those that you
intend to develop in the future, including the Pennsylvania Facility, the
Old Harbour
Terminal and the CHP Plant. Currently, the estimated steps to completion
and
completion dates of these facilities are unclear.
Risk Factors, page 6
7. We note that you direct readers to your risk factors. Please revise your
discussion to
balance your summary to discuss the principal challenges or weakness and
the risks and
limitations facing you.
Formation Transaction and Structure, page 7
8. You state that you will be the sole managing member of New Fortress
Intermediate LLC
("NFI") and will consolidate it. Based on the formation transactions, it
appears that New
Fortress Energy Holdings LLC will own a majority of the common units of
NFI ("NFI
LLC Units") following the offering. If this is the case, please tell how
you determined
consolidation of NFI is appropriate. In doing so, tell us whether you
will consolidate NFI
under the variable interest entity ("VIE") model or the voting interest
model and explain
the reasons supporting your conclusions. If you plan to consolidate NFI
under the voting
interest model, tell us whether you determined NFI is more akin to a
corporation or
limited partnership for consolidation assessment purposes. Refer to ASC
810.
Wesley R. Edens
NFE Financial Holdings LLC
September 14, 2018
Page 3
Organizational Structure, page 9
9. Revise to disclose who ultimately controls New Fortress Energy Holdings.
This
comment also applies to the beneficial ownership table on page 74.
Risk Factors
Our current ability to generate cash is substantially dependent upon the
performance by
customers under long-term contracts..., page 17
10. Here and elsewhere where you discuss the "long-term" nature of your
contracts, revise to
provide the range of lengths remaining, given your dependence upon them.
Please also
provide additional credit quality information about your
counter-parties, with a view to
understanding how you assessed their creditworthiness. Finally, enhance
your disclosure
to elaborate upon the "financial difficulties" recently experienced by
Noble Group.
Our business is dependent upon obtaining substantial additional funding from
various sources...,
page 19
11. Revise to specify the "meaningful period of time" you refer to here.
We may not be able to generate sufficient cash to service all of our
indebtedness..., page 20
12. Quantify your existing debt obligations and known future debt
obligations in order to put
this risk in context.
Use of Proceeds, page 42
13. We note that you disclose that you intend use the proceeds of the
offering "to complete
the construction of the Old Harbour Terminal, the Pennsylvania Facility
and the CHP
Plant, as well as for working capital and general company purposes."
Please revise to
specify the intended use of proceeds by each project discussed,
considering your
disclosure elsewhere indicates that you will need additional resources
to complete all of
these projects. See Item 504 of Regulation S-K.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 48
14. Please revise to break down the revenues you earn from natural gas and
LNG sales.
Cost of sales, page 49
15. Please disclose the amount of LNG purchased from third parties included
in cost of sales
for each period presented. We believe this disclosure would provide
useful information
Wesley R. Edens
NFE Financial Holdings LLC
September 14, 2018
Page 4
to investors in understanding the extent of LNG purchased externally
versus produced
internally.
Business, page 56
16. In your discussion of your business, we note your disclosure that you
intend to engage in
providing "financing capital investment to end users worldwide seeking
to convert their
operating assets from diesel or heavy fuel oil ("HFO") to LNG." In your
ensuing
discussion please provide additional discussion of this facet of your
business. For
example, please discuss how much capital you intend to allocate to this
business, and
what are the general terms and conditions of these investments
Our Liquefaction Assets, page 57
17. Please revise to disclose the capacity you are currently utilizing, out
of the total amount
available, at your Miami-Dade Facility.
Competitive Strengths, page 60
18. We note that you list as one of your competitive strengths is your
scalable infrastructure.
However, we note on page 62 that you have DOE orders authorizing you to
be able to
export a total of the equivalent of 60,000 mtpa (approximately 3.02
Bcf/yr) of
domestically produced LNG. If true, please discuss in an appropriate
place in your
prospectus how your present DOE orders limit your growth to 3.02
Bcf/year.
Financial Statements
19. Please provide financial statements of the registrant or tell us why you
believe they are
not required. If these financial statements are not required, disclose
in an appropriate
place in your filing, if true, that the registrant has not commenced
operations and has no
or nominal assets or liabilities and to describe in sufficient detail
any contingent liabilities
and commitments.
Consolidated Statements of Operations and Comprehensive Loss, page F-4
20. We note your pro forma income tax and net loss line items. Please also
present a pro
forma earnings per share figure or tell us why such disclosure is not
required.
Notes to Consolidated Financial Statements
21. Please provide the disclosures required by ASC 280-10-50-40 within your
financial
statement footnotes.
Wesley R. Edens
NFE Financial Holdings LLC
September 14, 2018
Page 5
12. Finance Leases, net, page F-16
22. We note that you account for arrangements involving your Montego Bay LNG
terminal
and "other arrangements to lease equipment to customers" as direct
finance leases.
Please address the following comments:
Tell us how you determined these arrangements fall within the scope
of ASC 840-10-
15 and how you determined direct financing classification, versus
sales-type
classification, was appropriate under ASC 840-10-25-43.
Explain how the net investment recorded for your direct financing
leases complies
with the guidance in ASC 840-30-30-11 through -13. In doing so,
clarify how you
determined the minimum lease payments and unguaranteed residual
value accruing to
your benefit.
We note that you allocate consideration received from customers
between lease and
non-lease components. Identify for us all lease and non-lease
components of these
arrangements. Clarify whether or not you consider LNG sales to be a
lease
component.
Exhibits
23. Tell us what consideration you have given to filing as exhibits your LNG
supply
agreement(s) as well as your GSAs, given how material they appear to be
to your
business. Refer to Item 601(b)(10) of Regulation S-K.
Please contact Yong Kim, Staff Accountant, at (202) 551-3323, or Andrew
Blume, Staff
Accountant, at (202) 551-3254 if you have questions regarding comments on the
financial
statements and related matters. Please contact Scott Anderegg, Attorney
Adviser, at (202) 551-
3342, or me at (202) 551-3720 if you have questions regarding the comments.
Sincerely,
/s/ Mara L. Ransom
Mara L. Ransom
Assistant Director
Office of Consumer
Products