Summary
Cheniere Energy, Inc. (LNG) filed an 8-K on June 28, 2010, detailing significant restructuring of its Sabine Pass LNG terminal operations and related agreements, effective July 1, 2010. The primary focus is the assignment of the Terminal Use Agreement from Cheniere Marketing, LLC to Cheniere Energy Investments, LLC, a subsidiary of Cheniere Energy Partners, L.P. This move shifts terminal use rights and associated obligations, with Cheniere Energy Partners, L.P. now guaranteeing Cheniere Investments' payment obligations. Furthermore, the filing outlines a new Variable Capacity Rights Agreement between Cheniere Investments and Cheniere Marketing, establishing a framework for Cheniere Marketing to utilize capacity at the Sabine Pass terminal. This includes a revenue-sharing arrangement and a mechanism for covering shortfalls in distributions to common unitholders. The report also details amendments to service agreements with JPMorgan LNG Co. and modifications to Cheniere's credit facility, including the application of approximately $63.6 million from a reserve account towards the repayment of outstanding loan principal and accrued interest.
Key Highlights
- 1Assignment of the LNG Terminal Use Agreement from Cheniere Marketing, LLC to Cheniere Energy Investments, LLC, a subsidiary of Cheniere Energy Partners, L.P.
- 2Establishment of a Variable Capacity Rights Agreement, allowing Cheniere Marketing to utilize Sabine Pass terminal capacity under specific terms.
- 3Cheniere Energy Partners, L.P. now guarantees the payment obligations of Cheniere Energy Investments, LLC under the Terminal Use Agreement.
- 4Amendments to service and capacity agreements with JPMorgan LNG Co., realigning payment flows and service fees.
- 5Application of approximately $63.6 million from the TUA Reserve Account to reduce the principal and accrued interest of Cheniere's 2008 convertible loans.
- 6Restructuring of the services fee paid by Cheniere Energy Partners, L.P. to Cheniere LNG Terminals, Inc., linking it to available cash after distributions and operational needs.
- 7Termination of the Original Tri-Party Agreement and introduction of a New Tri-Party Agreement involving Cheniere Investments, Sabine Pass LNG, and JPMorgan LNG Co.