Cheniere Agrees to Sell $2B of Equity for Sabine Pass Liquefaction Project

abarrelfullabarrelfull wrote on 15 May 2012 14:20
Tags: cheniere lng n-america usa

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Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE Amex: CQP) announced today that it has entered into a Unit Purchase Agreement ("Agreement") with investment funds managed by Blackstone Energy Partners L.P. and Blackstone Capital Partners VI L.P. (collectively with their affiliates "Blackstone"). Under the Agreement, Blackstone has agreed to purchase $1.5 billion newly issued CQP Class B units ("Class B Units") from Cheniere Partners in a private placement. As previously announced, Cheniere Energy, Inc. ("CEI") has also agreed to purchase $500 million newly issued Class B Units pursuant to a separate unit purchase agreement. Proceeds from the financings will be used to fund the equity portion of the costs of developing, constructing and placing into service the Sabine Pass LNG liquefaction project being developed adjacent to the Sabine Pass LNG terminal (the "Liquefaction Project"), to purchase the Creole Trail Pipeline from Cheniere Energy, Inc. and to fund modifications to the Creole Trail Pipeline and for other partnership business purposes.

Blackstone and CEI have agreed to purchase 100 million and 33.3 million, respectively, Class B Units for $15.00 per unit. On a quarterly basis, beginning on the initial funding date and ending on the conversion date, the Class B Units will accrete at a compounded rate of 3.5% per quarter. The Class B Units will be subject to conversion into Cheniere Partners common units, mandatorily or at the option of the holders of Class B Units, as provided in the amended partnership agreement. The Board of Directors of the general partner of Cheniere Partners will be comprised of eleven directors, including four directors appointed by CEI, three directors appointed by Blackstone, and four independent directors.

"Financing is the last milestone we need to complete in order to proceed with the construction of the first two trains of our Liquefaction Project at Sabine Pass. We expect to finance the Liquefaction Project with a combination of debt and equity, and these financings with Blackstone and CEI complete the equity portion. Blackstone is one of the top financial institutions in the energy sector, with a strong track record of investments, and we look forward to a longstanding, successful working relationship," said Charif Souki, Chairman and CEO. "We recently announced that we have engaged eight joint lead arranger banks to arrange the debt financing. We expect to complete the debt financing and advance our project in due course, with commencement of operations targeted for 2015."

David Foley, Senior Managing Director of Blackstone and CEO of Blackstone Energy Partners, said, "We continue to be impressed with the vision and capability of Cheniere's management team and are pleased to partner with them to develop the first natural gas liquefaction export facility in the continental United States, creating thousands of jobs for American workers and providing significant benefits to the local economy and the state of Louisiana."

At initial funding, Blackstone will purchase 33.3 million Class B Units and CEI will purchase 33.3 million Class B Units. Blackstone will make additional capital contributions as funds are requested by Cheniere Partners. Initial funding for Blackstone and CEI is subject, but not limited to, the execution of all definitive documentation, closing of the debt financing for the first two liquefaction trains, closing of the purchase and sale of the Creole Trail Pipeline between Cheniere Partners and CEI, and other conditions necessary to complete the transactions.

Credit Suisse Securities LLC acted as financial adviser to Cheniere Partners.

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