Pomerantz Appointed Lead Counsel in Höegh LNG Securities Litigation

On March 11, 2022, U.S. District Judge Kevin McNulty of the District of New Jersey appointed Pomerantz LLP as Lead Counsel on behalf of Yen-Hsun Huang and Scott Miller, the Co-Lead Plaintiffs, and the class, in In re Höegh LNG Partners LP Sec. Lig., 21-cv-19374 (D.N.J.). This securities action alleges that Höegh LNG Partners LP (the “Partnership” or the “Company”) misrepresented and failed to disclose that the Partnership was experiencing low demand and difficulties related to the financing of its floating storage and regasification units (“FSRUs”).

The Partnership provides floating liquefied natural gas (“LNG”) services, including LNG transportation services, LNG regasification, terminal solutions, and other management services. The Partnership was formed by Höegh LNG Holdings Ltd. (“Höegh LNG”), a leading LNG service provider. The Partnership’s purported strategy is to own, operate, and acquire FSRUs and associated LNG infrastructure assets under long-term charters. The Partnership has interests in five FSRUs, including the PGN FSRU Lampung in Indonesia. Through agreements and business structures briefly described below, the Partnership has a 100% economic interest in the PGN FSRU Lampung.

Allegations against Höegh include that: (i) the Partnership was facing issues with the PGN FSRU Lampung charter; (ii) as a result, the PGN FSRU Lampung charterer would state that it would commence arbitration to declare the charter null and void, and/or to terminate the charter, and/or seek damages; (iii) the Partnership would need to find alternative refinancing for its PGN FSRU Lampung credit facility; (iv) the PGN FSRU Lampung credit facility matured in September 2021, not October 2021 as previously stated; (v) the Partnership would be forced to accept less favorable refinancing terms with regards to the PGN FSRU Lampung credit facility; (vi) Höegh LNG would not extend the revolving credit line to the Partnership past its maturation date; (vii) Höegh LNG would reveal that it “will have very limited capacity to extend any additional advances to the Partnership beyond what is currently drawn under the facility”; (viii) as a result of the foregoing, the Partnership would essentially end distributions to common units holders; (ix) the COVID-19 pandemic was not the sole or root cause of the Partnership’s issues in Indonesia, in 2019, before the pandemic, there were already a very low amount of demand in Indonesia for the Partnership’s gas; and (x) the auditing, tax, nor maintenance of PGN FSRU Lampung were not the sole or root cause(s) of the Partnership’s issues in Indonesia.

On July 27, 2021, the Partnership announced that: (i) the Partnership had reduced its quarterly cash distribution to $0.01 per common unit, down from a distribution of $0.44 per common unit in the first quarter of 2021; (ii) the refinancing of the PGN FSRU Lampung credit facility, which had been scheduled to close by the end of the second quarter of 2021, was not yet completed due to the failure by the charterer of the PGN FSRU Lampung to consent to and countersign certain customary documents related to the new credit facility; (iii) the PGN FSRU Lampung charterer stated that it will commence arbitration to declare the charter null and void, and/or to terminate the charter, and/or seek damages in relation to the operations of the vessel and its charter; (iv) the revolving credit line of $85 million from Höegh LNG will not be extended when it matures on January 1, 2023; and (v) Höegh LNG will have very limited capacity to extend any additional advances to the Partnership beyond what is currently drawn under the facility.

On this news, the Partnership’s common unit price fell $11.57 per common unit, or 64%, to close at $6.30 per common unit on July 28, 2021.