Entry into a Material Definitive Agreement
6, 2019, Rio Grande LNG, LLC (“
”), a subsidiary of NextDecade Corporation (the “
”), entered into a lease agreement (the “
the Brownsville Navigation District of Cameron County, Texas (the “
”) pursuant to which RGLNG has agreed to lease approximately 984 acres of land situated in Brownsville, Cameron County, Texas (the “
”) for the purposes of constructing, operating, and maintaining (i) a liquefied natural gas facility and export terminal (the “
”) and (ii) gas treatment and gas pipeline facilities. Prior to the entry into the Lease Agreement, NextDecade LNG, LLC, a subsidiary of the Company and the parent of RGLNG (“
”), and the Landlord were parties to (i) a lease agreement concerning ten (10) acres of the Leased Premises (the “
”) and (ii) a site option agreement concerning the remainder of the Leased Premises that were not the subject of the Ten-Acre Lease (as amended, the “
Site Option Agreement
” and, together with the Lease and the Ten-Acre Lease, the “
Brownsville Land Agreements
The initial term of the Lease is for thirty (30) years (the “
”), which will commence on the date specified (the “
”) in a written notice by RGLNG to the Landlord (the “
Effective Date Notice
”), if given, confirming that RGLNG or a RGLNG affiliate has made its final investment decision for the first phase of the LNG Facility. The Effective Date may be no later than November 6, 2019 (the “
Outside Effective Date
, that in the event RGLNG does not deliver the Effective Date Notice prior to the Outside Effective Date due to reasons unrelated to an act or omission of its own or its inability to secure one or more of the required permits for the LNG Facility, then the Outside Effective Date will be automatically extended on a month-to-month basis for a maximum of six (6) months. If after such six-month period RGLNG does not deliver an Effective Date Notice to the Landlord, then the Lease will automatically terminate and be of no further force or effect and the Landlord will be entitled to retain any amounts prepaid under the Brownsville Land Agreements, unless otherwise agreed. RGLNG has the option to renew and extend the term of the Lease beyond the Primary Term for up to two (2) consecutive renewal periods of ten (10) years each provided that it has not caused an event of default under the Lease.
For the first five (5) years of the Primary Term, RGLNG will pay the Landlord rent for the Leased Premises of approximately $6.3 million per annum (the “
”), subject to adjustments pursuant to the terms of the Lease. After completion of such five-year period, the Rent will automatically be adjusted based on the Consumer Price Index (“
”) in February once every five (5) years, however, the Rent will not be increased by a percentage more than the percentage increase of the CPI during such period.
In addition to Rent, RGLNG will be responsible for certain costs and charges specified in the Lease, including certain Project expenses incurred by the Landlord, insurance costs, maintenance costs and taxes.
The foregoing description of the Lease does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Lease, a redacted copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2019. The Company intends to submit a Confidential Treatment Request
to the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, requesting that it be permitted to redact certain portions of the Lease.
Guaranty, Security Deposit
NextDecade has agreed to deliver to the Landlord simultaneously with the Effective Date Notice, if given, (i) a guaranty for RGLNG’s p
ayment and performance obligations arising under the Lease, (ii) a security deposit in the amount of three (3) months’ Rent, or approximately $1.5 million in total, and (iii) evidence of the insurances required under the Lease.