Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

Debt

Debt consisted of the following (in thousands):

	March 31, 2024		December 31, 2023
Senior Secured Notes and Loans:
6.67% Senior Secured Notes due 2033	$	700,000	$	700,000
6.72% Senior Secured Loans due 2033	356,000		356,000
7.11% Senior Secured Loans due 2047	251,000		251,000
6.85% Senior Secured Notes due 2047	190,000		—
Total Senior Secured Notes and Loans	1,497,000		1,307,000
Credit Facilities:
CD Senior Working Capital Facility	—		—
CD Credit Facility	817,000		484,000
TCF Credit Facility	102,000		59,000
Corporate Credit Facility	26,881		—
Total debt	2,442,881		1,850,000
Unamortized debt issuance costs	(49,151)		(33,699)
Total debt, net	$	2,393,730	$	1,816,301

Senior Secured Notes and Loans

The 6.67% Senior Secured Notes and 6.85% Senior Secured Notes (collectively, the “Senior Secured Notes”) as well as the 6.72% Senior Secured Loans and 7.11% Senior Secured Loans (collectively, the “Senior Secured Loans”) are senior secured obligations of Rio Grande, ranking senior in right of payment to any and all of Rio Grande’s future indebtedness that is subordinated to the Senior Secured Notes and the Senior Secured Loans, and equal in right of payment with Rio Grande’s other existing and future indebtedness that is senior and secured by the same collateral securing the Senior Secured Notes and Senior Secured Loans. The Senior Secured Notes and Senior Secured Loans are secured on a first-priority basis by a security interest in all of the membership interests in Rio Grande and substantially all of Rio Grande’s assets, on a pari passu basis with the CD Credit Agreement and the TCF Credit Facility.

Credit Facilities

Below is a summary of our committed credit facilities outstanding as of March 31, 2024 (in thousands):

	CD Senior Working Capital Facility		CD Credit Facility		TCF Credit Facility		Corporate Credit Facility
Total Facility Size	$	500,000	$	9,554,000	$	800,000	$	62,500
Less:
Outstanding balance	—		817,000		102,000		26,881
Letters of credit issued	120,625		—		—		—
Available commitment	$	379,375	$	8,737,000	$	698,000	$	35,619
Priority ranking	Senior secured		Senior secured		Senior secured		Senior secured
Interest rate on outstanding balance	SOFR + 2.25%		SOFR + 2.25%		SOFR + 2.25%		SOFR + 4.50%
Commitment fees on undrawn balance	0.68 %		0.68 %		0.68 %		1.35 %
Maturity Date	2030		2030		2030		2026

The obligations of Rio Grande under the CD Senior Working Capital Facility and CD Credit Facility are secured by substantially all of the assets of Rio Grande as well as a pledge of all of the membership interests in Rio Grande on a first-priority, pari passu basis with the Senior Secured Notes, the Senior Secured Loans and the loans made under the TCF Credit Facility.

The obligations of Rio Grande under the TCF Credit Agreement are secured by substantially all of the assets of Rio Grande as well as a pledge of all of the membership interests in Rio Grande on a first-priority, pari passu basis with the Senior Secured Notes, the Senior Secured Loans and the loans made under the CD Credit Agreement. Total Energies Holdings SAS (“Total Holdings”) provides contingent credit support to the lenders under the TCF Credit Agreement to pay past due amounts owing from Rio Grande under the agreement upon demand.

The obligations of NextDecade LLC under the Corporate Credit Facility are guaranteed by Rio Grande LNG Super Holdings, LLC, a wholly owned subsidiary of NextDecade LLC, and Rio Grande LNG Intermediate Super Holdings, LLC, a partially owned subsidiary of NextDecade LLC. The Corporate Credit Facility matures at the earlier of two years from the closing date or 10 business days after a positive Final Investment Decision (FID) on Train 4 at the Rio Grande LNG facility.

Restrictive Debt Covenants

The CD Credit Facility and the TCF Credit Facility (collectively, the “Rio Grande Facilities”) include certain covenants and events of default that are supplemental to the covenants and events of default set forth in the P1 Common Terms Agreement and that are customary for project financing facilities of this type, including a requirement that interest rates for a minimum of 75% of the projected principal amount of Senior Secured Debt outstanding be hedged or have fixed interest rates. In addition, certain covenants and events of default in the Rio Grande Facilities are more restrictive than the corresponding covenants and events of default in the P1 Common Terms Agreement, including covenants limiting Rio Grande’s ability to incur additional indebtedness, make certain investments or pay dividends (which are subject to customary conditions set out in the Facilities and certain related financing documents) or distributions on equity interests or subordinated indebtedness or purchase, redeem, or retire equity interests, sell or transfer assets, incur liens, dissolve, liquidate, consolidate, merge, sell, or lease all or substantially all of Rio Grande’s assets or enter into certain LNG sales contracts. The Rio Grande Facilities include a requirement for Rio Grande to maintain a historical debt service coverage ratio of at least 1.10:1.00 at the end of each fiscal quarter starting from the Initial Principal Payment Date, a default of which may be cured with equity contributions.

The Senior Secured Notes also contain customary terms and events of default and certain covenants that, among other things, limit Rio Grande’s ability to incur additional indebtedness, make certain investments or pay dividends or distributions on equity interests or subordinated indebtedness or purchase, redeem, or retire equity interests, sell or transfer assets, incur liens, dissolve, liquidate, consolidate, merge, or sell or lease all or substantially all of Rio Grande’s assets. The Senior Secured Notes further require Rio Grande to submit certain reports and information to the trustee and holders of the Senior Secured Notes, maintain certain LNG offtake agreements, and maintain a debt service coverage ratio of at least 1.10:1.00 at the end of each fiscal quarter starting from the Initial Principal Payment Date. With respect to certain events,

including a change of control event and receipt of certain proceeds from asset sales, events of loss or liquidated damages, the indenture governing the Senior Secured Notes requires Rio Grande to make an offer to repurchase the Senior Secured Notes at 101% (with respect to a change of control event) or par (with respect to each other event), in each case on the terms specified in the Indenture. The Senior Secured Notes covenants are subject to a number of important limitations and exceptions, including the terms and covenants contained in the P1 Common Terms Agreement.

The Senior Secured Loan Agreement contains customary terms and events of default and certain covenants that, among other things, limit Rio Grande’s ability to incur additional indebtedness, make certain investments or pay dividends or distributions on equity interests or subordinated indebtedness or purchase, redeem, or retire equity interests, sell or transfer assets, incur liens, dissolve, liquidate, consolidate, merge, or sell or lease all or substantially all of Rio Grande’s assets. The Senior Secured Loan Agreement further requires Rio Grande to submit certain reports and information to the Administrative Agent and the lenders, maintain certain LNG offtake agreements, and maintain a debt service coverage ratio of at least 1.10:1.00 at the end of each fiscal quarter starting from the first quarterly payment date to occur on or after the date that is ninety days following the project completion date. With respect to certain events, including a change of control event and receipt of certain proceeds from asset sales, events of loss or liquidated damages, the Senior Secured Loan Agreement requires Rio Grande to make an offer to the lenders to have their Senior Secured Loans prepaid at 101% (with respect to a change of control event) or par (with respect to each other event), in each case, on the terms specified in the Senior Secured Loan Agreement. The Senior Secured Loan Agreement covenants are subject to a number of important limitations and exceptions, including the terms and covenants contained in the P1 Common Terms Agreement.

As of March 31, 2024, the Company was in compliance with all covenants related to its respective debt agreements.

Debt Extinguishment

During the three months ended March 31, 2024, Rio Grande repaid $176.0 million of the outstanding principal balance of the CD Credit Facility. As a result of the repayment, Rio Grande recognized an approximate $7.4 million loss on extinguishment.

Debt Maturities

	Principal Payments
2024 - 2025	$	—
2026	26,881
2027 - 2028	—
Thereafter	2,416,000
Total	$	2,442,881

Interest Expense

Total interest expense, net of capitalized interest, consisted of the following (in thousands):

	Three Months Ended March 31,
	2024		2023
Interest per contractual rate	$	36,591	$	—
Amortization of debt issuance costs	16,388		—
Other interest costs	551		—
Total interest cost	53,530		—
Capitalized interest	(28,051)		—
Total interest expense, net of capitalized interest	$	25,479	$	—

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in thousands):

	March 31, 2024				December 31, 2023
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Senior Notes - Level 2	$	890,000	$	912,108	$	700,000	$	743,593
Senior Loans - Level 2	607,000		621,969		607,000		632,998

The fair value of the Senior Secured Notes and Senior Secured Loans was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates on debt issued by parties with comparable credit ratings.    

The fair value of the CD Credit Facility, TCF Credit Facility and Corporate Credit Facility approximates its respective carrying amount due to its variable interest rate, which approximates a market interest rate.