New Fortress Energy: Navigating Debt and Puerto Rico Risks in a Renewable Shift

New Fortress Energy (NFE) has emerged as a pivotal player in global energy infrastructure, but its recent financial restructuring and strategic shifts now face critical tests. Investors must weigh the company’s bold moves to extend debt maturities and refocus on core projects against escalating execution risks and a misalignment with Puerto Rico’s renewable energy ambitions. This article dissects NFE’s financial overhaul, project vulnerabilities, and its fading role in Puerto Rico’s energy transition—key factors determining whether the stock’s current valuation is justified or overvalued.

The Financial Restructuring Gamble

NFE’s 2024 debt and equity transactions—totaling $3 billion—were designed to buy time. By extending average debt maturities to 3.8 years and raising $400 million in equity, the company aimed to stabilize its balance sheet. Yet, Q1 2025 results reveal cracks in this strategy:
- Net Loss Widened: A $197 million loss, compared to a $57 million profit in the same period last year.
- EBITDA Plunged: Core EBITDA fell to $82 million from $340 million in Q1 2024, as the Puerto Rico power contract termination gutted revenue.
- Debt Still Looms: Total liabilities hit $11.12 billion, with $2.639 billion in 12% senior notes due in 2029.

The sale of Jamaican assets for $1.055 billion—allocated to repay $325 million in debt—provides temporary relief. However, without a clear path to improve EBITDA/interest coverage (currently below Moody’s target of 1.5x), NFE risks further credit downgrades.

Project Execution: Brazil’s CELBA and Puerto Rico’s Gas Dilemma

NFE’s future hinges on two high-stakes projects:
1. Brazil’s CELBA Power Plant:
- Progress: 95% complete, set to begin operations in Q3 2025.
- Risk: Delays or cost overruns could strain liquidity. With $350 million in Brazil notes issued to repay local debt, the plant must deliver on its 624 MW capacity to justify the investment.

1. Puerto Rico’s LNG Transition:
2. Contract Extension: NFE renegotiated a $110 million gas supply deal to convert diesel plants to LNG, reducing emissions.
3. Strategic Shift: The company’s exit from the Puerto Rico power market—after selling emergency plants to PREPA in 2024—hints at a broader retreat from the island’s energy sector.

Why Puerto Rico’s Power Auction Exclusion Matters

While NFE’s exclusion from Puerto Rico’s 2025 power auction was never explicitly confirmed in public filings, its strategic decisions speak volumes:
- Terminated Contracts: The end of its temporary power contract in 2024 marked a retreat from Puerto Rico’s grid.
- Focus on Debt: Proceeds from asset sales prioritized debt reduction over new Puerto Rico investments.

This shift clashes with Puerto Rico’s goal to achieve 40% renewable energy by 2030. NFE’s LNG projects, while cleaner than diesel, fail to align with renewable mandates. Competitors like AES Corp (AES) or Dominion Energy (D), which emphasize solar and wind, now dominate the island’s renewable auction landscape.

Misalignment with Renewable Goals: A Growing Risk

Puerto Rico’s energy emergency executive order (April 2025) emphasizes grid modernization and renewable integration. NFE’s reliance on LNG—despite its efficiency—leaves it outside the renewable-driven future Puerto Rico demands. Meanwhile, Brazil’s June 2025 power auctions offer NFE a second chance, but success there won’t erase the reputational damage of fading relevance in Puerto Rico.

The Bottom Line: Buy, Hold, or Sell?

Risks to Consider:
- Debt Overhang: With $2.6 billion in high-interest notes, NFE’s leverage remains a liability.
- Project Delays: CELBA’s delayed start or Puerto Rico’s regulatory hurdles could strain cash flows.
- Rating Downgrades: Moody’s has already lowered the CFR to Caa1; further cuts could trigger cross-default clauses.

Bull Case:
- CELBA’s on-time delivery could boost EBITDA.
- Brazil’s energy growth and Nicaragua’s LNG terminal could create new revenue streams.

Investment Verdict:
While NFE’s restructuring buys time, its Puerto Rico missteps and renewable misalignment create long-term headwinds. Aggressive investors might consider a small position on dips below $8, but caution is warranted. Monitor Q3 2025 for CELBA’s performance and Puerto Rico’s regulatory stance.

In a market hungry for energy infrastructure plays, NFE’s story remains a high-risk, high-reward bet—best reserved for those who can stomach volatility.