New Fortress Energy moves to separate Brazilian operations to reduce debt

March 17 (Reuters) - New Fortress Energy NFE.O said on Tuesday it will separate its Brazilian operations into a standalone company as part of a broader restructuring deal with creditors aimed at cutting its debt.

Shares rose more than 30% on the news before paring gains to 2.4% in after‑hours trading.

The operational reset is expected to reduce the company's corporate debt to about $527.5 million from roughly $5.7 billion.

New Fortress Energy said it has signed an agreement with creditors under a consensual UK restructuring plan, which it expects to launch in April.

The company, which focuses on LNG infrastructure and power projects, has struggled to secure long-term LNG supply for power plants in Latin America as it lacks investment-grade credit rating, forcing it to buy fuel at higher prices.

In 2024, New Fortress began exploring options, including bringing in strategic partners, selling assets after deferring shareholder dividends to preserve cash and working out a deal with bondholders to push back maturities.

Under the latest restructuring plan, it will split into two entities: a privately held Brazil-focused company owned by creditors and a publicly traded "New NFE" that will hold the rest of its global assets.

The split is expected to be completed by mid-2026.

The Brazil-focused entity, to be based in Rio de Janeiro, will be owned by a group of global institutional investors.

Creditors will receive up to $2.5 billion in preferred equity and about 65% of the new company's common equity, while existing shareholders will be diluted to roughly 35%, with potential for further dilution.

Separately, the LNG company said in a filing that its previously issued audited and unaudited financial statements for 2023–2025 should no longer be relied upon.

The filing added that New Fortress identified a material weakness in its internal control over financial reporting as of December 31, 2024, which pressed further throughout 2025.