Could Glenfarne claim a state tax break is 'value' it added to company for buyback?

The confidential 2025 document about the AGDC deal with Glenfarne appears to be in wide circulation, as noted in the Alaska Beacon coverage Thursday.

Every member of the Legislature should be required to read this important document and understand it before casting another vote.

And every member of the Legislature should be asking themselves what they didn’t know when the “Build the Line!” political propaganda campaign created the act-now-or-you-will-kill-the-gasline panic.

What members of the Legislature still don’t know is whether Glenfarne can count the value of any tax break it gets as “value” that it has added to the project for buyback purposes.

The document includes milestones that Glenfarne is supposed to be meet, including a June 1 deadline to have had a binding contract by now to sell 1 million tons of LNG a year and letters of intent with firm pricing from natural gas suppliers on the North Slope.

Their agreement follows Delware law and AGDC waived the right to a jury trials for disputes. If there are disputes, Glenfarne and AGDC will go to binding arbitration.

One of the big unanswered questions is whether Glenfarne has the right to demand that AGDC buy out Glenfarne at any time.

But it does appear that if AGDC determines that Glenfarne has not met key milestones, then AGDC can start a process to buy out Glenfarne. All of this would be secret for a couple of years.

The amount that AGDC would have to pay Glenfarne would be based on how much “value” Glenfarne has added to the company. So exactly how would that value be calculated?

Glenfarne would propose a price and AGDC could accept it or make a counter-offer.

If the two sides disagree, an “independent investment bank” will be called upon to decide how much money Glenfarne will get. You can take it to the nearest independent investment bank that the two sides will not agree.

The question remains: Exactly how is “value” added to the pipeline project? Do state concessions add value to the project that Glenfarne would want to benefit from? The answer has to be yes from the Glenfarne point of view.

The state should make it clear that concessions can’t be turned into cash at a later date, but I don’t know if the contract would allow that. One of the amendments that the Senate added to its version of the gasline bill

There is no commercial reason why the general outline of the buyback plan had to be kept secret.

It was kept secret for political reasons. It’s best to get it out in the open right now.

In a June 16 hearing before the Senate Finance Committee, Matt Kissinger, a private consultant who works with AGDC and Adam Prestidge of Glenfarne failed to tell the whole truth in that they didn’t mention the existence of the clawback provisions.

“There is no scenario in which we would ask the state for money,” said Prestidge. He will argue, no doubt, that he was talking about what would happen if the project goes forward and that the buyback provision would not be a matter of asking the state for money, but asking to be compensated for “value” that Glenfarne brought to the company.

Kissinger and Prestidge were saying this to senators who knew what was in the confidential documents and the senators knew they were not getting the complete story. They were being misled.

Sen. Jesse Kiehl asked about what would happen about ownership of assets if the project doesn’t go forward. Kissinger said Glenfarne would be out, but he failed to mention that Glenfarne, as the developer, would get paid for leaving the 8 Star LLC.

“You’d have a withdrawal from 8 Star by the developer and AGDC would become the 100 percent owner of 8 Star again, as we were. And all that would reside with 8 Star exactly as it did before Glenfarne came into the project,” Kissinger said.

“Is there a provision for compensation for those at the withdrawal of one party?” Kiehl asked.

“No there is not,” said Kissinger.

(The confidential document some legislators had already scene said that Glenfarne would get compensation for whatever ‘value’ it had added. Kissinger should have said that there is a provision for compensation.)

Kiehl asked if legislators could get a copy of that part of the agreement with Glenfarne.

“Please allow us to discuss that in terms of our confidentiality and what each party’s willing to waive,” said Kissinger.

Sen. Bert Stedman said that failure of the project is not in anyone’s best interest, but he said that if Glenfarne exits the scene, “Is there going to be a request back to the state to have to buy that data back?”

Kissinger again did not address the clawback provision, but said that existing information held by the holding company would remain with the holding company, which would be 100 percent owned by AGDC if Glenfarne decided to terminate its relationship. No money would change hands.

That was a misleading statement, however.

“Was there preliminary discussions when all this came together about any exit strategies and purchases, buybacks, any of that stuff? It just seems kind of odd to me,” said Stedman, referring to the 2025 confidential document that Kissinger didn’t know legislators had seen.

19:53 - Senator Stedman through the chair, there is a different provision around making the developer leave, which would require a payment.

20:05 - quitting themselves and

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