What are the key financial covenants Cheniere Marketing, Inc. must adhere to?

Key financial covenants include maintaining a minimum working capital of $40,000,000, a tangible net worth of at least $40,000,000, and a leverage ratio not exceeding 7.5 to 1.0. Additionally, capital expenditures are limited to an aggregate of $5,000,000.

What is the interest rate and maturity for loans under this facility?

Loans under the credit facility will generally bear interest at a variable rate equal to LIBOR plus 1.50%. Borrowers have the option to elect interest at the prime rate of BNP Paribas or BNP Paribas' cost of funds plus 1.50%. Each loan matures on the earlier of two months after being incurred or September 12, 2008.

What collateral secures this credit facility, and are there any priority issues?

The credit facility is secured by a security interest in all of Cheniere Marketing, Inc.'s personal property related to its natural gas business. However, the Collateral Trust Agreement reveals that any security interest granted to Crest Investment Company is senior to the security interest for this credit facility, meaning Crest Investment Company has priority in claims on the collateral.

LNG 8-K: Material Agreements & Financial Events

Q: What is the primary purpose of this $100 million credit facility?

The primary purpose of the credit facility is to provide Cheniere Marketing, Inc. with financing for its operations related to the purchase, sale, storage, transfer, or exchange of natural gas and other approved products. It will also support commodity and derivative contracts and fund the subsidiary's working capital requirements.

Summary

Cheniere Energy, Inc. (LNG) reported on September 20, 2007, the closing of a $100 million revolving credit facility for its wholly-owned subsidiary, Cheniere Marketing, Inc. This facility, provided by BNP Paribas as the initial lender and administrative agent, allows for revolving loans and letters of credit up to a combined limit of $100 million, subject to a borrowing base. The funds are intended for financing, securing, or guaranteeing activities related to the purchase, sale, storage, transfer, or exchange of natural gas and approved products, as well as for supporting commodity and derivative contracts and working capital needs of the subsidiary. The credit facility has a maturity date of September 12, 2008, or two months after a loan is incurred. Interest on loans will generally be at LIBOR plus 1.50%, with options for prime rate or cost of funds alternatives. The agreement includes various covenants that the borrower must adhere to, such as minimum working capital and tangible net worth, a maximum leverage ratio, and limitations on capital expenditures and asset disposals. Several events of default are also outlined, including non-payment, misrepresentations, failure to comply with the agreement, and financial distress or insolvency.

Key Highlights

1Cheniere Marketing, Inc., a subsidiary of Cheniere Energy, Inc., secured a $100 million revolving credit facility with BNP Paribas.
2The facility can be used for loans and letters of credit, with a combined limit of $100 million, based on a borrowing base.
3Proceeds are designated for natural gas trading activities, commodity contracts, derivative contracts, and working capital.
4Loans mature by September 12, 2008, with options for LIBOR-based or prime rate interest.
5Key covenants include minimum working capital and tangible net worth, and a maximum leverage ratio of 7.5:1.
6The facility is secured by a security interest in the Borrower's personal property related to its natural gas business.
7The security interest in favor of Crest Investment Company is senior to the security interest securing the Credit Facility obligations.

Cheniere Energy, Inc. 8-K Report, Material Agreement (Sep 20, 2007)

Summary

Key Highlights

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