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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 29, 2006
CHENIERE ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-16383 95-4352386
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
717 Texas Avenue
Suite 3100
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 659-1361
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure.
On June 29, 2006 ("Effective Date"), Sabine Pass Tug Services, LLC ("Sabine
Tug Services"), a wholly-owned subsidiary of Cheniere Energy, Inc. ("Cheniere"),
entered into a Marine Services Agreement (the "Agreement") with Alpha Marine
Services, L.L.C. ("Alpha Marine"), a subsidiary of Edison Chouest Offshore.
Pursuant to the Agreement, Alpha Marine will provide marine services at the
liquefied natural gas ("LNG") terminal currently under construction in western
Cameron Parish, Louisiana, on the Sabine Pass Channel (the "Terminal") owned by
Sabine Pass LNG, L.P. ("Sabine Pass"), a wholly-owned subsidiary of Cheniere and
an affiliate of Sabine Tug Services.
MARINE SERVICES
The Agreement requires Alpha Marine to employ three (3) newly-built tugs
(unless Sabine Tug Services determines to mobilize a fourth tug) on a continuous
basis in order to provide the following services:
(a) escorting LNG vessels;
(b) assisting in the berthing and unberthing of LNG vessels at the
Terminal;
(c) standing-by an LNG vessel at all times (except in certain cases) while
an LNG vessel is in berth at the Terminal;
(d) standing-by at the Terminal when no LNG vessel is present;
(e) performing fire fighting, lifesaving, and other emergency response
services (including spill or hazardous material spill response and
cleanup activities) needed by an LNG vessel or the Terminal which can
be reasonably and safely provided by the tugs;
(f) conducting salvage and/or wreck removal activities, as authorized
under the Agreement;
(g) providing picket boat services to the Terminal and any LNG vessels
berthed at the Terminal;
(h) performing such other related or ancillary tasks as may be requested
by Sabine Tug Services; and
(i) performing other activities directly related to the performance by
Alpha Marine of the marine services under the Agreement.
TERM
Alpha Marine will commence providing the marine services no earlier than
October 1, 2007, but no later than February 12, 2008 ("Service Date"). The
initial term of the Agreement commenced on the Effective Date, and will end on
the ten (10) year anniversary of the Service Date (the "Initial Term"). Sabine
Tug Services has the option to extend the Initial Term for up to two (2)
additional, consecutive extension terms of five (5) years each.
NON-AVAILABILITY
Alpha Marine will use its best efforts to avoid and minimize any occasions
on which any of the tugs are not available to provide the marine services when
needed. If a tug is not available to fully perform the marine services, Alpha
Marine is to promptly provide a replacement tug to provide the services at its
expense, which expense is not to exceed $100,000 per year.
CONSIDERATION
In consideration of Alpha Marine performing the marine services, Sabine Tug
Services will pay Alpha Marine the day rate as determined under the Agreement.
CONSTRUCTION AND OPERATION OF TUGS
Alpha Marine will cause four (4) tugs to be constructed in compliance with
the characteristics outlined in the Agreement. The tugs are to be in service and
ready to commence marine services by February 12, 2008. If one or more of the
tugs has not commenced marine services by February 12, 2008, then Sabine Tug
Services may terminate the Agreement if (i) the unavailability of a tug
continues for 90 days and is not excused by reason of force majeure suffered by
Alpha Marine; or (ii) the unavailability of a tug continues for more than 180
days by reason of force majeure suffered by Alpha Marine.
TERMINATION
Sabine Tug Services may terminate the Agreement at any time upon giving
Alpha Marine 30 days' prior written notice, and by paying (i) any day rate or
other payments then owing under the Agreement, or (ii) a break-up fee if the
termination is during the Initial Term. The break-up fee payable if Sabine Tug
Services terminates the Agreement during the first full calendar year during the
Initial Term is $4,000,000, and declines $400,000 for each succeeding calendar
year thereafter. For example, the break-up fee payable in year ten of the
Initial Term would be $400,000.
Sabine Tug Services may terminate the Agreement for cause if after
notification to Alpha Marine of a material breach, it reasonably believes that
Alpha Marine cannot cure such breach, or within three (s) days of such notice,
Alpha Marine fails in the reasonable opinion of Sabine Tug Services to remedy
the breach or to provide adequate assurance that such breach will be remedied.
Sabine Tug Services may also terminate the Agreement in the event of Alpha
Marine's bankruptcy or insolvency or should any government requisition or
otherwise take possession of one or more Tugs.
GUARANTEE
On June 28, 2006, Cheniere issued a guarantee (the "Guarantee") to Alpha
Marine to guarantee Sabine Tug Services' payment obligations under the
Agreement, provided that Cheniere's liability under the Guarantee shall not in
the aggregate exceed $5,000,000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHENIERE ENERGY, INC.
Date: June 29, 2006 By: /s/ Zurab S. Kobiashvili
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Name: Zurab S. Kobiashvili
Title: Senior Vice President
and General Counsel