Golar LNG Partners Preferred Units: Distribution Might Be Gone Forever

Golar LNG Partners has not declared or paid its quarterly preferred unit distribution and remains dependent on financial support from its parent company, New Fortress Energy. Given New Fortress Energy's increasing debt issues, reinstatement of the preferred unit distribution is unlikely, potentially leaving preferred unitholders with no return in a bankruptcy scenario. A "Hold" rating is maintained pending further developments.

Analysis

Golar LNG Partners (GMLPF) has not declared or paid its quarterly distribution for its 8.75% Series A Cumulative Redeemable Preferred units, reflecting its precarious financial position as an "empty shell" entity. The partnership's viability is entirely dependent on financial support from its parent company, New Fortress Energy (NFE), which is reportedly grappling with "escalating debt issues." This situation casts serious doubt on the reinstatement of the preferred unit distribution, with a high probability it may not resume. The strong negative sentiment surrounding NFE (sentiment score: -0.85) underscores these concerns. In a potential New Fortress Energy bankruptcy, GMLPF's preferred unitholders face a significant risk of realizing no recovery on their investment. Reflecting this uncertainty and the existing distress, an analyst has reiterated a "Hold" rating on GMLPF, pending the emergence of more tangible information to clarify the outlook.

Key Decisions for Investors

• Investors in Golar LNG Partners' preferred units should be aware of the acute risk of continued non-payment of distributions and the potential for complete capital loss contingent on New Fortress Energy's financial stability.
• Diligent monitoring of New Fortress Energy's debt situation, liquidity, and any official communications regarding its financial support for Golar LNG Partners is critical.
• Given the current "Hold" rating and the substantial uncertainty surrounding the parent company, consider deferring new investments or significant position changes in GMLPF preferred units until greater clarity emerges regarding New Fortress Energy's financial trajectory and its implications for GMLPF.