TheGlobe.com Inc (TGLO)

[senor_c]

Using LLCs

"Delfin FLNG1 LLC" (confirmed)

(Delfin boys are smaht – sorry for the long and choppy narrative)

Under Delfin’s model, each FLNG unit would be an individual company with commercial contracts and finance. FIDs would be taken separately on each floater. Pastoor said this gives the company a great deal of flexibility on how to handle the financing, structure and the way the company sells the LNG from the unit.

(from Tradewinds article/interview posted by Rhodan)

Now we know how Delfin is creating separate individual companies. They are creating separate LLCs for each vessel. We knew they would treat these as separate projects, but we didn’t know how they were going to structure them. Now we know. Companies are currently taking equity stakes in these private entities. I confirmed the first LLC earlier this month, and I’ve been doing research since. Delfin obviously will have some membership percentage, but clearly, they are looking for companies like Vitol, Devon, etc. to invest in the LLC vessels. When Delfin talks about equity to debt, I’m guessing the debt will fund Delfin’s percentage of the LLC membership, meaning Delfin’s portion will be financed by a bank (or other financial entity). The equity obviously coming from Devon, Vitol, others. Delfin is clearly hoping for more equity membership in these early stages to reduce the burden of Delfin taking on more debt.

The members of the LLCs will be able to invest more or sell part of their interest. In theory, Delfin could gain more percentage in these LLC vessels over time, growing their overall asset share while making the initial investors whole and then some (not to mention the profits investors will make from their portion of the actual LNG). Of course, Devon or Vitol, etc., could also sell their share to another company if and when they are ready to move on. Either way, Delfin and the other LLC members will have flexibility with how they sustain the membership and partnerships of these LLC vessels, selling portions of their membership to reduce risk or buying more to increase ownership interest as previously mentioned.

These LLCs will be simpler as investments and projects to manage, especially when it comes to membership/ownership, liability, and taxes (profits/losses) for these companies. I would be shocked if they make these projects public entities. There is no reason to make them public LLCs (which is rare) or change each LLC to a corporation. We could get into all of that, but it would be insane to have potentially 6 separate public subsidiaries (Delfin LNG – 4; Avocet – 2). They can operationalize everything from a private LLC, and these other companies/members can act as managing partners for each project, without worrying about how other vessels’ issues/performance might impact their individual project/company. It’s totally separate and totally brilliant. There’s a lot more one could say about all of this, but I’m generalizing for the sake of sharing this information and sharing the broad strokes.

The perceived down side is that, in theory, these entities can make FID without any public entity like TGLO. I’ve seen large companies use LLCs to protect the main company from liability when a project is new. This could be Delfin’s approach or possibly their approach just to start.

HOWEVER…if each vessel is its own project/entity/company, Delfin Midstream’s share in those initial vessels will be limited, probably as the holding company (possibly loaning funds obtained by financial institutions to Delfin LNG or Avocet for example but not necessary – could be funded directly to those companies – and they will need to be paying off their loans/debt for the upstart and initial ongoing costs). Also, I’m assuming they will use the same equity/debt approach to build out the rest of Delfin LNG and Avocet to keep their risk and debt in check. That’s just smart business. Why use all your money when you can use someone else’s, right? Exactly. So that’s where TGLO comes in. TGLO/DLFN will be the parent/holding company (which many here have speculated), providing management/support to each separate LLC project. (I’m guessing Delfin LNG and Avocet will also be holding entities)

I know we all were thinking along these lines, but for me, knowing now that an LLC has been formally created for the first vessel, it provides us more information in terms of how they plan to structure those projects and how TGLO will be used (for example – not necessarily used to fund this first LLC project). As others have pointed out, the Delfin officers and employees will want the benefits of the public entity, especially since the separate LLC projects will not necessarily be funding the Delfin Midstream development/holding company operations.

Delfin Midstream (DLFN) will of course be supplying support in different ways (management/financial, etc.) to each project – but separately. Sure, Delfin Midstream could stay private, but to develop these projects and others at the pace they are suggesting, they would need a massive company to fund all of this. They don’t have that or want that. As North and others recently said, this is their baby; it’s their company that they want to be leaders in this industry (and show Golar, TELL, etc. how it’s done). All of the other DD that everyone has put together, coupled with their decision to have separate LLCs, tells me that they will need that public company as the holding company to provide Delfin Midstream the same flexibility and creative options when it comes to supporting and managing all of those smaller companies (including getting executives rich from the public side – not necessarily the LLC side).

P.S. Don't pay for the "additional information"...I did and it does not give you any more information other than that they set-up the LLC in March. No files/documents were available. Also, the "Registered Agent" for the new LLC s the same as Delfin Midstream's listed agent through Delaware.