What is the main purpose of this transaction for Cheniere?

The main purpose is to secure significant capital for the construction of Cheniere's liquefaction facilities in Cameron Parish, Louisiana, and to fund the acquisition of the Creole Trail Pipeline. This transaction is a key step in advancing the development of their Sabine Pass LNG project.

Who is Blackstone and what are their rights in this deal?

Blackstone CQP Holdco LP is the Purchaser of the Class B Units. They are investing up to $1.5 billion. Blackstone will gain substantial governance rights, including the right to appoint directors to the Partnership's board and significant approval powers through an Executive Committee for major business decisions.

How do the Class B Units differ from regular Common Units?

Class B Units are a special class of units with specific terms. They are subject to a premium conversion value that increases quarterly, do not receive cash distributions except in liquidation, and have a preference in liquidation events. They will eventually convert into Common Units of the Partnership under specific conditions.

What is the significance of the LNG Sale and Purchase Agreement with Cheniere Marketing?

This agreement is important as it secures an off-take arrangement for potentially excess LNG produced at the Sabine Pass facility. It's a 20-year agreement with Cheniere Marketing, providing a framework for the sale of LNG that is not already committed to third parties, contributing to the project's commercial viability.

LNG 8-K: Material Agreements

Summary

Cheniere Energy, Inc. (LNG) announced a significant strategic transaction through its subsidiary, Cheniere Energy Partners, L.P. (the "Partnership"), with Blackstone CQP Holdco LP ("Purchaser"). The Partnership has entered into a Unit Purchase Agreement to sell 100 million Class B Units to the Purchaser for $1.5 billion, with an initial funding of $500 million. These proceeds are earmarked for the construction of Cheniere's liquefaction facilities in Cameron Parish, Louisiana, and the acquisition of the Creole Trail Pipeline. This agreement represents a crucial step in advancing Cheniere's Sabine Pass liquefaction project, securing substantial capital for construction. The structure of the Class B Units and the associated agreements, including the Amended Partnership Agreement and Amended LLC Agreement, detail governance rights, conversion terms, and potential dilution. The transaction also includes an LNG Sale and Purchase Agreement (FOB) between Sabine Pass Liquefaction and Cheniere Marketing, indicating progress in securing off-take for the project's output.

Key Highlights

1Cheniere Energy Partners, L.P. is selling 100 million Class B Units to Blackstone CQP Holdco LP for up to $1.5 billion.
2Initial funding of $500 million for 33,333,334 Class B Units at $15 per unit.
3Proceeds will be used for construction of liquefaction facilities in Cameron Parish, Louisiana, and acquisition of the Creole Trail Pipeline.
4Blackstone will have significant governance rights, including board representation and approval rights via an Executive Committee.
5Class B Units have specific conversion terms into Common Units, with mandatory conversion upon substantial completion of Train 3 or a fifth-year anniversary.
6A 20-year LNG Sale and Purchase Agreement (FOB) was entered into between Sabine Pass Liquefaction and Cheniere Marketing for excess LNG.
7The transaction is subject to conditions, including debt financing for construction of liquefaction trains and the closing of the Creole Trail Pipeline acquisition.

Cheniere Energy, Inc. 8-K Report, Material Agreement (May 15, 2012)

Summary

Key Highlights

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