| Noncontrolling Interest Disclosure |
Non-controlling Interest
We have consolidated certain partnerships because we have a controlling interest in these ventures. Therefore, the entities’ financial statements are consolidated in our consolidated financial statements and the entities’ other equity is recorded as a non-controlling interest. The following table sets forth the components of our non-controlling interest balance since inception attributable to third-party investors’ interests at June 30, 2012 (in thousands):
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Net proceeds from Cheniere Partners’ issuance of common units (1) |
$ |
159,586 |
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Net proceeds from Holdings’ sale of Cheniere Partners common units (2) |
203,946 |
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Distributions to Cheniere Partners’ non-controlling interest (3) |
(137,353 |
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Net proceeds from Cheniere Partners’ issuance of class B units (4) |
(5,000 |
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Non-controlling interest share of loss of Cheniere Partners |
(30,542 |
) |
Non-controlling interest at June 30, 2012 |
$ |
190,637 |
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(1) |
In March and April 2007, we and Cheniere Partners completed a public offering of 15,525,000 Cheniere Partners common units (the "Cheniere Partners Offering"). Cheniere Partners received $98.4 million in net proceeds from the issuance of its common units to the public. Prior to January 1, 2009, a company was able to elect an accounting policy of recording a gain or loss on the sale of common equity of a subsidiary equal to the amount of proceeds received in excess of the carrying value of the parent’s investment. Effective January 1, 2009, the sale of common equity of a subsidiary is accounted for as an equity transaction.
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In January 2011, Cheniere Partners initiated an at-the-market program to sell up to 1.0 million common units, the proceeds from which would be used primarily to fund development costs associated with its proposed liquefaction project at the Sabine Pass LNG terminal. As of December 31, 2011, Cheniere Partners had sold 0.5 million common units with net proceeds of $9.0 million. During the six months ended June 30, 2012, Cheniere Partners sold 0.4 million common units with net proceeds of $8.8 million related to this at-the-market program.
In September 2011, Cheniere Partners sold 3.0 million common units in an underwritten public offering and 1.1 million common units to Cheniere Common Units Holding, LLC, a wholly owned subsidiary of Cheniere, at a price of $15.25 per common unit. Cheniere Partners received net proceeds of $43.3 million and $16.4 million from the public offering and Cheniere Common Units Holding, LLC sale, respectively.
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(2) |
In conjunction with the Cheniere Partners Offering, Cheniere LNG Holdings, LLC ("Holdings") sold a portion of the Cheniere Partners common units held by it to the public, realizing net proceeds of $203.9 million, which included $39.4 million of net proceeds realized once the underwriters exercised their option to purchase an additional 2,025,000 common units from Holdings. Due to the subordinated distribution rights on our subordinated units, we have recorded those proceeds as a non-controlling interest.
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(3) |
Cash distributions to the non-controlling interest are recorded directly against the non-controlling interest on our Consolidated Balance Sheets. There is no obligation beyond what is reflected in our consolidated financial statements to fund or absorb such distributions to the non-controlling interest. If in the future the non-controlling interest on our Consolidated Balance Sheets is reduced to zero, these distributions may increase the loss allocated to us. |
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(4) |
In May 2012, we, through a wholly owned subsidiary, and Cheniere Partners entered into a unit purchase agreement (the "CEI Unit Purchase Agreement") whereby we agreed to purchase from Cheniere Partners 33.3 million Class B Units at a price of $15.00 per unit for total consideration of $500 million. In June 2012, Cheniere Partners sold $166.7 million of Class B Units to us pursuant to the CEI Unit Purchase Agreement and incurred $5.0 million in financing costs.
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