What is the main impact of the Amended and Restated Investors' Agreement?

The primary impact is allowing the Convertible Lenders, currently Scorpion Capital Partners LP, to directly convert their outstanding loans into Cheniere's common stock at a fixed ratio of $5 of loans per share. This removes previous restrictions on their ability to vote their Series B Preferred Stock and convert it, aligning them more closely with other common stockholders.

How does the Ninth Amendment to the Credit Agreement affect Cheniere's investment in CQP?

The Ninth Amendment allows Cheniere's subsidiary, CCUH, to invest up to $20 million in newly issued common units of Cheniere Energy Partners, L.P. (CQP). This investment is contingent on CQP conducting a public offering and CCUH purchasing at least 500,000 units at a price not exceeding the public offering price.

Are there any changes to how the shares received from loan conversions can be sold?

Yes, the Restated Investors' Agreement modifies the registration rights for common stock issued upon conversion. Holders of these shares will no longer have the ability to demand registration or participate in underwritten offerings by the Company. However, the Company remains obligated to maintain a shelf registration statement for these shares.

What is the significance of the collateral release mechanism introduced by the Ninth Amendment?

This new provision simplifies the collateral structure. Once all loans held by lenders other than the Convertible Lenders are paid off, the collateral securing the outstanding loans can be released. This could streamline financial operations and reduce administrative burdens related to collateral management.

LNG 8-K: Material Agreements, Financial Events & More

Summary

Cheniere Energy, Inc. (LNG) filed an 8-K on September 13, 2011, detailing significant amendments to its financial agreements. Key among these is the Amended and Restated Investors' Agreement, which allows for the direct conversion of loans held by "Convertible Lenders," specifically Scorpion Capital Partners LP, into Cheniere's common stock. This change removes previous voting restrictions for these lenders and simplifies the conversion process, with an exchange ratio of $5 of loans per share of common stock. The total outstanding principal balance eligible for conversion is approximately $8.4 million. Additionally, the filing includes a Ninth Amendment to the Credit Agreement. This amendment permits Cheniere Common Units Holding, LLC (CCUH), a subsidiary, to purchase up to $20 million in new common units of Cheniere Energy Partners, L.P. (CQP) under specific conditions related to CQP's public offerings. It also introduces a mechanism to release collateral securing loans once all loans except those held by the Convertible Lenders are fully repaid. These changes are aimed at enhancing financial flexibility and restructuring debt and equity relationships.

Key Highlights

1Cheniere Energy subsidiary CCUH entered into an Amended and Restated Investors' Agreement and a Ninth Amendment to Credit Agreement.
2Convertible Lenders can now directly exchange their loans for Cheniere's common stock at a $5 per share ratio, removing prior voting and conversion restrictions.
3The total principal balance of loans convertible into common stock is approximately $8.4 million, held by Scorpion Capital Partners LP (an affiliate of a director).
4Registration rights for common stock issued to Convertible Lenders upon conversion have been modified, eliminating demand registration and underwritten offering participation.
5CCUH is permitted to purchase up to $20 million in new Cheniere Energy Partners, L.P. (CQP) common units under specific conditions.
6A new provision allows for the release of collateral on outstanding loans once non-convertible lender loans are fully repaid.

Cheniere Energy, Inc. 8-K Report, Material Agreement (Sep 13, 2011)

Summary

Key Highlights

Frequently Asked Questions