Methanex Announces Final Investment Decision for Advantaged Geismar 3 Project
20 July 2019 - 7:27AM
Methanex Corporation (TSX:MX) (NASDAQ:MEOH) announced today that
its Board of Directors reached a unanimous final investment
decision to construct a 1.8 million tonne methanol plant in
Geismar, Louisiana adjacent to its existing Geismar 1 and Geismar 2
facilities. Construction on the Geismar 3 plant will begin later
this year and operations are targeted in the second half of 2022.
The cost of the project is expected to be between US$1.3-$1.4
billion including costs of approximately US$60 million incurred to
date.
The Company has a robust and flexible financing
plan for the Geismar 3 project. We have arranged committed
financing for the project with a new five-year US$800 million
construction facility and for the renewal of our existing US$300
million revolving credit facility, which replaces the Company’s
existing revolving facility, to provide further liquidity. Both
facilities have been arranged with a syndicate of banks and will
expire in July 2024. In addition, the Company expects to access the
debt capital markets during the second half of 2019 to pre-fund
approximately US$250 million of the Geismar 3 2020 expenditures and
to repay the Company’s US$350 million aggregate principal amount of
bonds due in December 2019.
John Floren, President & CEO of Methanex,
commented, “We are extremely pleased to move forward with the
Geismar 3 project which we believe will create significant
long-term value for shareholders. Compared to a standalone US
Gulf greenfield plant, this project benefits from substantial
capital and operating cost advantages, and we expect will deliver
outstanding returns. We believe we are well positioned to complete
this project as we have a rigorous and well-defined execution plan,
an experienced team in place and a strong balance sheet and
financial flexibility to execute the project safely across a wide
range of prices. As we have stated previously, we have a preference
to have a strategic partner for the project and we will continue to
pursue that option.”
Mr. Floren added, “As part of the cooperation
agreement we reached with M&G Investments earlier this year, we
retained an independent financial advisory firm to advise and
support the Audit, Finance and Risk Committee of the Board in
reviewing the Company’s financing plan for the Geismar 3 project.
The independent financial advisory firm was one of the three firms
agreed to by both parties in the cooperation agreement. The
independent review was rigorous and the report, which was reviewed
in detail with the Audit, Finance and Risk Committee and shared
with the full Board as part of their review of the Geismar 3
project, concluded that we have a robust financing plan.”
Mr. Floren concluded, “Our long-term outlook for
the methanol industry is very positive. Demand forecasts for
methanol are strong and new capacity additions will be needed to
meet expected demand growth. We have a long track record of making
disciplined capital investments to enhance our leadership position
while maintaining a strong balance sheet and returning excess cash
to shareholders. Geismar 3 is an exceptional opportunity to deliver
on our long-term strategy to enhance our position as the methanol
industry leader.”
A presentation regarding the Geismar 3 project
can be found on the Company’s website at
www.methanex.com/investor-relations.
Methanex is a Vancouver-based, publicly traded
company and is the world's largest producer and supplier of
methanol to major international markets. Methanex shares are listed
for trading on the Toronto Stock Exchange in Canada under the
trading symbol "MX" and on the NASDAQ Global Market in the United
States under the trading symbol "MEOH”. Methanex can be visited
online at www.methanex.com.
FORWARD-LOOKING INFORMATION
WARNING
This news release contains forward-looking
statements with respect to us and our industry. These statements
relate to future events or our future performance. All statements
other than statements of historical fact are forward-looking
statements. Statements that include the words "believes,"
"expects," "may," "will," "should," "potential," "estimates,"
"anticipates," "aim," "goal", "targets" or other comparable
terminology and similar statements of a future or forward-looking
nature identify forward-looking statements.
More particularly and without limitation, any statements
regarding the following are forward-looking statements:
- expected demand for methanol and its derivatives;
- expected new methanol supply or restart of idled capacity and
timing for start-up of the same;
- expected shutdowns (either temporary or permanent) or restarts
of existing methanol supply (including our own facilities),
including, without limitation, the timing and length of planned
maintenance outages;
- expected methanol and energy prices;
- expected levels of methanol purchases from traders or other
third parties;
- expected levels, timing and availability of economically priced
natural gas supply to each of our plants;
- capital committed by third parties towards future natural gas
exploration and development in the vicinity of our plants;
- our expected capital expenditures;
- anticipated operating rates of our plants;
- expected operating costs, including natural gas feedstock costs
and logistics costs;
- expected tax rates or resolutions to tax disputes;
- expected cash flows, earnings capability and share price;
- availability of committed credit facilities and other
financing;
- our ability to meet covenants or obtain or continue to obtain
waivers associated with our long-term debt obligations, including,
without limitation, the Egypt limited recourse debt facilities that
have conditions associated with the payment of cash or other
distributions and the finalization of certain land title
registrations and related mortgages which require actions by
Egyptian governmental entities;
- expected impact on our results of operations in Egypt or our
financial condition as a consequence of actions taken or inaction
by Egyptian governmental entities;
- our shareholder distribution strategy and anticipated
distributions to shareholders;
- commercial viability and timing of, or our ability to execute
future projects, plant restarts, capacity expansions, plant
relocations or other business initiatives or opportunities;
- our financial strength and ability to meet future financial
commitments;
- expected global or regional economic activity (including
industrial production levels);
- expected outcomes of litigation or other disputes, claims and
assessments; and
- expected actions of governments, governmental agencies, gas
suppliers, courts, tribunals or other third parties.
We believe that we have a reasonable basis for
making such forward-looking statements. The forward-looking
statements in this document are based on our experience, our
perception of trends, current conditions and expected future
developments as well as other factors. Certain material factors or
assumptions were applied in drawing the conclusions or making the
forecasts or projections that are included in these forward-looking
statements, including, without limitation, future expectations and
assumptions concerning the following:
- the supply of, demand for and price of methanol, methanol
derivatives, natural gas, coal, oil and oil derivatives;
- our ability to procure natural gas feedstock on commercially
acceptable terms;
- operating rates of our facilities;
- receipt or issuance of third-party consents or approvals,
including, without limitation, governmental registrations of land
title and related mortgages in Egypt and governmental approvals
related to rights to purchase natural gas;
- the establishment of new fuel standards;
- operating costs, including natural gas feedstock and logistics
costs, capital costs, tax rates, cash flows, foreign exchange rates
and interest rates;
- the availability of committed credit facilities and other
financing;
- global and regional economic activity (including industrial
production levels);
- absence of a material negative impact from major natural
disasters;
- absence of a material negative impact from changes in laws or
regulations;
- absence of a material negative impact from political
instability in the countries in which we operate; and
- enforcement of contractual arrangements and ability to perform
contractual obligations by customers, natural gas and other
suppliers and other third parties.
However, forward-looking statements, by their
nature, involve risks and uncertainties that could cause actual
results to differ materially from those contemplated by the
forward-looking statements. The risks and uncertainties primarily
include those attendant with producing and marketing methanol and
successfully carrying out major capital expenditure projects in
various jurisdictions, including, without limitation:
- conditions in the methanol and other industries including
fluctuations in the supply, demand and price for methanol and its
derivatives, including demand for methanol for energy uses;
- the price of natural gas, coal, oil and oil derivatives;
- our ability to obtain natural gas feedstock on commercially
acceptable terms to underpin current operations and future
production growth opportunities;
- the ability to carry out corporate initiatives and
strategies;
- actions of competitors, suppliers and financial
institutions;
- conditions within the natural gas delivery systems that may
prevent delivery of our natural gas supply requirements;
- competing demand for natural gas, especially with respect to
domestic needs for gas and electricity in Chile and Egypt;
- actions of governments and governmental authorities, including,
without limitation, implementation of policies or other measures
that could impact the supply of or demand for methanol or its
derivatives;
- changes in laws or regulations;
- import or export restrictions, anti-dumping measures, increases
in duties, taxes and government royalties and other actions by
governments that may adversely affect our operations or existing
contractual arrangements;
- world-wide economic conditions; and
- other risks described in our 2018 Annual Management’s
Discussion and Analysis and our First Quarter 2019 Management’s
Discussion and Analysis.
Having in mind these and other factors,
investors and other readers are cautioned not to place undue
reliance on forward-looking statements. They are not a substitute
for the exercise of one’s own due diligence and judgment. The
outcomes implied by forward-looking statements may not occur and we
do not undertake to update forward-looking statements except as
required by applicable securities laws.
For further information, contact:
Kim CampbellManager, Investor RelationsMethanex
Corporation604 661-2600 or Toll Free: 1 800 661
8851www.methanex.com
Louise McMahonManager, CommunicationsMethanex
Corporation604 661-2600 or Toll Free: 1 800 661
8851www.methanex.com
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