| Noncontrolling Interest |
Non-controlling Interest
We have consolidated Cheniere Partners, a master limited partnership formed by us to own and operate the Sabine Pass LNG terminal and related assets. The entities’ financial statements are consolidated in our consolidated financial statements and the entity's 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 September 30, 2012 (in thousands):
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Net proceeds from Cheniere Partners’ issuance of common units (1) |
$ |
355,765 |
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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) |
(145,651 |
) |
Net proceeds from Cheniere Partners’ issuance of Class B Units (4) |
887,361 |
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Non-controlling interest share of loss of Cheniere Partners |
(33,417 |
) |
Non-controlling interest at September 30, 2012 |
$ |
1,268,004 |
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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 the Liquefaction Project. As of December 31, 2011, Cheniere Partners had sold 0.5 million common units with net proceeds of $9.0 million. During the nine months ended September 30, 2012, Cheniere Partners sold 0.5 million common units with net proceeds of $11.1 million.
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.
In September 2012, Cheniere Partners sold 8.0 million common units in an underwritten public offering at a price of $25.07 per common unit for net cash proceeds of $194.0 million.
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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 recorded those proceeds as 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, Cheniere Partners and Blackstone CQP Holdco LP ("Blackstone") entered into a unit purchase agreement (the "Blackstone Unit Purchase Agreement") whereby Cheniere Partners agreed to sell to Blackstone in a private placement 100 million Class B Units of Cheniere Partners ("Class B Units") at a price of $15.00 per Class B Unit. Cheniere Partners has issued and sold 66.7 million Class B Units to Blackstone as of September 30, 2012. The net proceeds will be used to fund the equity portion of the costs of developing, constructing and placing into service LNG trains 1 and 2 of the Liquefaction Project.
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