<PAGE>
As filed with the Securities and Exchange Commission on June 16, 1999
Registration No. 333-70195
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CHENIERE ENERGY, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 95-4352386
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1200 Smith Street, Suite 1740
Houston, Texas 77002-4313
(713) 659-1361
(Address, including zip
code, and telephone number, including area code, of
registrant's principal executive offices)
Michael L. Harvey
President and Chief Executive Officer
Cheniere Energy, Inc.
1200 Smith Street, Suite 1740
Houston, Texas 77002-4312
(713) 659-1361
(Name, address, including zip
code, and telephone number, including area code,
of agent for service)
Copies to:
John B. Clutterbuck
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002-2778
(713) 225-7000
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of each maximum maximum
class of securities to offering aggregate Amount of
be registered Amount to be price offering registration
Registered per share price fee
<S> <C> <C> <C> <C>
Common Stock,
par value $.003
per share 5,427,117 $1.453/(1) $ 7,885,601 $ 2,326.25
Common Stock,
par value $.003
per share, to be
issued upon exercise
of warrants 4,462,500/(2) $1.582/(3) $ 7,059,375 $ 2,082.52
Total 9,889,617 $14,944,976 $4,408.77/(4)
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee, based on the average of the high and low prices for the
Company's Common Stock as reported on The Nasdaq SmallCap Market on June
11, 1999 in accordance with Rule 457(c) under the Securities Act of 1933.
(2) Represents the number of shares issuable upon the exercise of warrants.
(3) Estimated solely for the purpose of computing the amount of the
registration fee, based on the average exercise price of the warrants in
accordance with Rule 457(g).
(4) Because $2,308.38 was previously paid, an additional $2,100.39 in
registration fee is being paid in connection with this filing.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Prospectus Subject to Completion
- ---------- June 16, 1999
CHENIERE ENERGY, INC.
9,889,617 SHARES OF COMMON STOCK
This prospectus relates to the offer and sale of up to 9,889,617
shares of common stock of Cheniere Energy, Inc. Of these shares, 5,427,117 are
held by stockholders and the other 4,462,500 are issuable upon the exercise of
warrants held by warrantholders. One or more of the selling stockholders may
offer to sell these shares from time to time. We will not receive any proceeds
of these sales, but if any of the warrants are exercised, we will receive
payment for the exercise price of the warrants.
Our common stock is traded on The Nasdaq SmallCap Market under the
symbol "CHEX." The last reported sales price of the common stock on The Nasdaq
SmallCap Market on June 11, 1999 was $1.50 per share.
--------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
- ----------------------------------------
The date of this prospectus is June __, 1999
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any of these documents at the public reference rooms maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Securities and Exchange
Commission: New York Regional Office, Seven World Trade Center, New York, New
York 10048, and Central Regional Office, 1801 California Street, Suite 4800,
Denver, Colorado 80202. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the public reference rooms. Our
filings are also available to the public from commercial documents retrieval
services and at the Internet website maintained by the Securities and Exchange
Commission at http://www.sec.gov.
Our common stock is quoted on The Nasdaq SmallCap Market. You may also
read our reports, proxy and information statements and other information at The
Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C. 20006.
This prospectus is part of the registration statement that we filed with
the Securities and Exchange Commission to register the shares of common stock
referred to above being offered. This prospectus does not contain important
information that you can find in our registration statement and in the annual,
quarterly and special reports, proxy statements and other documents that we file
with the Securities and Exchange Commission.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose in
this prospectus important information to you by referring you to other documents
that have been or will be filed with the Securities and Exchange Commission.
The information below is incorporated in this prospectus by reference and is an
important part of this prospectus, except where any of the information has been
modified or superceded by the information in this prospectus or in information
incorporated by reference in this prospectus. Also, information that we file
after the date of this prospectus with the Securities and Exchange Commission
will automatically be incorporated in this prospectus and update and supersede
this information. We incorporate by reference the documents listed below and
any future filings made with the Securities and Exchange Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
all of the securities offered by this prospectus are sold:
- Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
- Our Quarterly Report on Form 10-Q for the three months ended
March 31, 1999;
- Our Proxy Statement dated April 30, 1999.
2
<PAGE>
We will provide you, without charge, a copy of the documents incorporated by
reference in this prospectus. We will not provide a copy of the exhibits to
documents incorporated by reference, unless those exhibits are specifically
incorporated by reference into those documents. You may obtain documents
incorporated by reference in this prospectus by requesting them in writing or by
telephone from:
Cheniere Energy, Inc.
1200 Smith Street, Suite 1740
Houston, Texas 77002-4312
Attn: Don A. Turkleson, Chief Financial Officer
(713) 659-1361
You should rely only on the information provided or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of the shares in any state
where the offer is not permitted. You should not assume that the information in
this prospectus, in any prospectus supplement or in any document incorporated by
reference herein is accurate as of any date other than the date on the front of
those documents.
CHENIERE ENERGY, INC.
Cheniere Energy, Inc. is a Houston-based company formed for the purpose of
oil and gas exploration, development and exploitation. We commenced our oil and
gas activities in April of 1996.
It is important for you to know that we have not yet established any oil
and gas production, and though we have established proved reserves through
drilling in 1999, we will not fully evaluate and report the amount and value of
these reserves until the filing of our annual report for the year ended December
31, 1999. We are currently a development stage enterprise with no operating
revenues to date.
Our common stock has been publicly traded since July 3, 1996 under the name
Cheniere Energy, Inc. Our principal executive offices are located at 1200 Smith
Street, Suite 1740, Houston, Texas 77002, and our telephone number is (713) 659-
1361.
The Louisiana Joint Exploration Program
We are involved with one major project: a 3-D seismic joint exploration
project in southern Louisiana. The 3-D seismic survey covers 228 square miles
within a 310 square-mile area running three to five miles north and generally
eight miles south of the coastline in the most westerly portion of Cameron
Parish, Louisiana. Acquisition of the seismic data in the field was completed
in July 1997, and area-wide processing was completed in December 1997. Leasing
activities were begun in March 1998, and further interpretation of the seismic
data continues. Drilling of prospects identified within the area of the
Louisiana joint exploration project began in February 1999.
3
<PAGE>
The Louisiana joint exploration program is governed by an exploration
agreement between us and Zydeco Energy, Inc.
Arbitration Proceedings
We have received the binding award of an independent panel of arbitrators
reviewing a dispute related to the rights and obligations of us and Zydeco under
the exploration agreement. We have discussed the rulings of the panel in our
Annual Report on Form 10-K that is "incorporated by reference" as discussed
under the heading "Where You Can Find More Information" above.
RISK FACTORS
We have a limited operating history during which we have continually incurred
losses and we may continue to incur losses.
We have a limited operating history with respect to our oil and gas
exploration activities, which were commenced through the Louisiana joint
exploration program in April 1996. From our inception we have incurred losses
and may continue to incur losses in 1999, depending on whether we generate
sufficient revenue from producing reserves acquired either through acquisitions
or drilling activities.
We have no current oil and gas production and limited proved reserves, which
means that our success is highly dependent on the success of our primary asset,
the Louisiana joint interest program.
We have not yet established oil and gas production. Through our drilling
in 1999, we have established "proved reserves," which means that we have
identified oil and gas reserves that geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. Currently, our
primary asset is our interest in the Louisiana joint exploration program.
Because almost all of our assets are represented by the investment to date in
the Louisiana joint exploration program, and we anticipate investing additional
amounts in the program, we are highly dependent on the success of the Louisiana
joint exploration program.
We may need additional financing and may not be able to obtain it on terms that
are acceptable to us, which could harm our ability to conduct our business.
4
<PAGE>
We presently have no operating revenues. As of December 31, 1998, we had
only $750,538 of current assets. Because of our low level of current assets, we
may need additional capital for a number of purposes, and our inability to
obtain additional financing could significantly harm our ability to conduct our
business, including our ability to take advantage of opportunities that come
from the Louisiana joint interest exploration program. Our need for additional
financing might include the following:
- Additional capital will be required to pay for our share of costs
relating to the drilling of prospects and development of those that
are successful, to exercise lease options, and to acquire additional
oil and gas leases. The total amount of our capital needs will be
determined in part by the number of prospects generated within the
Louisiana joint exploration program and by the working interest that
we retain in those prospects.
- We may need funds for the repayment of a portion of the $4.0 million
plus interest in notes payable that were outstanding as of December
31, 1998. In April 1999, we issued 2,812,528 shares of common stock
at a price of $0.72 per share in exchange for the cancellation of
$2,025,020 of the notes payable. We have extended the maturity date
for remainder of the notes payable to July 15, 1999, and may need
funds to repay them.
- Should we choose to make an acquisition of producing oil and gas
properties, it is likely that such an acquisition would require that
some portion of the purchase price be paid in cash, thus would create
the need for additional capital.
Our future capital needs might be especially urgent in connection with the
Louisiana exploration agreement. Under the terms of the agreement, we made
seismic fund payments totaling $16.4 million and earned a 50% interest in the
seismic data. Zydeco is obligated under the terms of the agreement to develop
prospects from its analysis of the seismic data and to present those prospects
to us for our election to participate. Should we elect to participate in a
prospect proposed by Zydeco, we must make payment to Zydeco as a reimbursement
of prospect expenses within 45 days of the date such expenses are billed by
Zydeco. We currently do not have sufficient capital to meet our future payment
obligations under the exploration agreement if we elect to participate in
prospects proposed under it. Further, there can be no assurance that we will
successfully secure the necessary funds to do so.
Additional capital could be obtained from a combination of funding sources.
These potential funding sources include:
- borrowings from financial institutions,
- debt offerings, which would increase our leverage and add to our need
for cash to service such debt,
- additional offerings of our equity securities, which could cause
substantial dilution of our common stock, or
5
<PAGE>
- sales of portions of our working interest in the prospects within the
Louisiana joint exploration program, which would reduce future
revenues from the Louisiana joint exploration program.
Our ability to raise additional capital will depend on the results of our
operations and the status of various capital and industry markets at the time
such additional capital is sought. Accordingly, there can be no assurances that
capital will be available to us from any source or that, if available, it will
be on terms acceptable to us.
Because of our lack of diversification, factors harming the oil and gas industry
in general, including downturns in prices for oil and gas, would be especially
harmful to us.
As an independent energy company, our revenues and profits will be
substantially dependent on the oil and gas industry in general and the
prevailing prices for oil and gas in particular. Circumstances that harm the
oil and industry in general will have an especially harmful effect on us. Oil
and gas prices have been and are likely to continue to be volatile and subject
to wide fluctuations in response to any of the following factors:
- relatively minor changes in the supply of and demand for oil and gas;
- political conditions in international oil producing regions;
- the extent of domestic production and importation of oil in relevant
markets;
- the level of consumer demand;
- weather conditions;
- the competitive position of oil or gas as a source of energy as
compared with other energy sources;
- the refining capacity of oil purchasers; and
- the effect of federal and state regulation on the production,
transportation and sale of oil and gas.
It is likely that adverse changes in the oil market or the regulatory
environment would have an adverse effect on our ability to obtain capital from
lending institutions, industry participants, private or public investors or
other sources.
We experience intense competition in the oil and gas industry, which may make it
difficult for us to succeed.
6
<PAGE>
The oil and gas industry is highly competitive. If we are not able to
compete effectively, we will not succeed. A number of factors may give our
competitors advantages over us. For example, most of our current and potential
competitors have significantly greater financial resources and a significantly
greater number of experienced and trained managerial and technical personnel
than we do. There can be no assurance that we or the Louisiana joint
exploration program will be able to compete effectively with such companies.
We are subject to significant operating hazards and uninsured risks, one or more
of which may create significant liabilities for us.
Our oil and gas operations are subject to all of the risks and hazards
typically associated with the exploration for, and the development and
production of, oil and gas. In accordance with customary industry practices, we
intend to maintain insurance against some, but not all, of these risks and
losses. The occurrence of a significant event not fully insured or indemnified
against could seriously harm us. Moreover, no assurance can be given that we
will be able to maintain adequate insurance in the future at rates we consider
reasonable. Risks in drilling operations include cratering, explosions,
uncontrollable flows of oil, gas or well fluids, fires, pollution and other
environmental risks. Our activities are also subject to perils specific to
marine operations, such as capsizing, collision and damage or loss from severe
weather. These hazards can cause personal injury and loss of life, severe
damage to and destruction of property and equipment, pollution or environmental
damage and suspension of operations.
We are subject to significant exploration risks, including the risk that we may
not be able to find or produce enough oil and gas to generate any profits.
Our exploration activities involve significant risks, including the risk
that we may not be able to find or produce enough oil and gas to generate any
profits. There can be no assurance that the use of technical expertise as
applied to geophysical or geological data will ensure that any well we drill
will discover oil or gas. Further, there is no way to know in advance of
drilling and testing whether any prospect under the Louisiana joint exploration
program will yield oil or gas in sufficient quantities to make money for us. In
addition, we are highly dependent on seismic activity and the related
application of new technology as a primary exploration methodology. There can be
no assurance that our efforts under the Louisiana joint exploration program will
be successful.
7
<PAGE>
We may not be able to acquire the oil and gas leases we need to sustain
profitable operations.
There can be no assurance that the Louisiana joint exploration program or
any other oil and gas venture we are involved with will be successful in
acquiring farmouts, seismic permits, lease options, leases or other rights to
explore for or recover oil and gas. Consequently, the area covered by the
Louisiana joint exploration program that could be explored through drilling
could be reduced if these leases, permits, options and the like are not
acquired. Both the United States Department of the Interior and the State of
Louisiana award oil and gas leases on a competitive bidding basis. Further,
non-governmental owners of the onshore mineral interests within the area covered
by the Louisiana joint exploration program are not obligated to lease their
mineral rights to us except where we have already obtained lease options. Other
major and independent oil and gas companies with financial resources
significantly greater than those of the Louisiana joint exploration program may
bid against us for the purchase of oil and gas leases.
If we are unable to obtain satisfactory turnkey contracts, we may have to assume
additional risks and expenses when drilling wells.
We anticipate that any wells drilled in which we have an interest will be
drilled by established industry contractors under turnkey contracts that limit
our financial and legal exposure. Circumstances may arise, however, where a
turnkey contract is not economically beneficial to us or is otherwise
unobtainable from proven industry contractors. In such instances, we may decide
to drill wells on a day-rate basis, subjecting us to the usual drilling hazards
such as cratering, explosions, uncontrollable flows of oil, gas or well fluids,
fires, pollution and other environmental risks. We would also be liable for any
cost overruns attributable to drilling problems that otherwise would have been
covered by a turnkey contract.
Under a turnkey drilling contract, a negotiated price is agreed upon and
the money placed in escrow. The contractor then assumes all of the risk and
expense, including any cost overruns, of drilling a well to contract depth and
completing any agreed upon evaluation of the wellbore. Upon performance of all
these items, the escrowed money is released to the contractor. On a non-turnkey
basis, all risk and expense, including cost overruns, of drilling a well to
total depths lies with the operator.
Existing and future United States governmental regulation, taxation and price
controls could seriously harm us.
Oil and gas production and exploration are subject to comprehensive
federal, state and local laws and regulations controlling the exploration for
and production and sale of oil and gas and the possible effects of such
activities on the environment. Failure to comply with such rules and
regulations can result in substantial penalties and may harm us. Present, as
well as future, legislation and regulations could cause additional expenditures,
restrictions and delays in our business, the extent of which cannot be predicted
and which may require us to limit substantially, delay or cease operations in
some circumstances. In most areas where we plan to
8
<PAGE>
conduct activities, there are statutory provisions regulating the production of
oil and natural gas which may restrict the rate of production and adversely
affect revenues. We plan to acquire oil and gas leases in the Gulf of Mexico,
which will be granted by the federal government and administered by the U.S.
Department of Interior Minerals Management Service. The Department strictly
regulates the exploration, development and production of oil and gas reserves in
the Gulf of Mexico. Such regulations could seriously harm our operations in the
Gulf of Mexico. The federal government regulates the interstate transportation
of oil and natural gas, through the Federal Energy and Regulatory Commission.
The FERC has in the past regulated the prices at which oil and gas could be
sold. Federal reenactment of price controls or increased regulation of the
transport of oil and natural gas could seriously harm us. In addition, our
operations are subject to numerous laws and regulations governing the discharge
of oil and hazardous materials into the environment or otherwise relating to
environmental protection, including the Oil Pollution Act of 1990. These laws
and regulations have continually imposed increasingly strict requirements for
water and air pollution control, solid waste management, and strict financial
responsibility and remedial response obligations relating to oil spill
protection. The cost of complying with such environmental legislation could have
a general harmful effect on our operations.
We may experience year 2000 problems, which could cause disruptions of our
operations.
The Year 2000 presents significant issues for many computer systems.
Much of the software in use today may not be able to accurately process data
beyond the year 1999. The vast majority of computer systems process
transactions using two digits for the year of the transaction, rather than the
full four digits, making such systems unable to distinguish January 1, 2000 from
January 1, 1900. Such systems may encounter significant processing inaccuracies
or become inoperable when Year 2000 transactions are processed. Such matters
could impact not only us in our day-to-day operations but also our financial
institutions, customers and vendors as well as state, provincial and federal
governments with jurisdictions where we maintain operations.
We are currently addressing Year 2000 issues and are presently
focusing on our internal business systems and processes. To the extent
necessary, we will assess the readiness of any key business partners (financial
institutions, customers, vendors, oil and gas operators, etc.).
It has been our strategy to use, wherever possible, industry prevalent
products and processes with minimal customization. As a result, we do not
expect any extensive in-house hardware, software or process conversions in an
effort to be Year 2000 compliant nor do we expect Year 2000 compliance related
costs to be material to our operations.
Our goal is to be Year 2000 compliant by June 30, 1999 wherever
possible and to have contingency plans in place where compliance is not possible
in a timely manner. While it is the our goal to be Year 2000 compliant, there
can be no assurance that there will not be a material adverse effect on Cheniere
as a result of a Year 2000 related issue. Our business partners may present the
area of greatest risk to us, in part because of our limited ability to influence
actions of third parties, and in part because of our inability to estimate the
level and impact of noncompliance of third parties.
9
<PAGE>
Additionally, there are many variables and uncertainties associated with
judgments regarding any contingency plans we develop.
There is only limited trading in our common stock, which makes our stock more
difficult to sell than the stock of companies with more active markets.
There is only limited trading in our common stock, which makes our stock
more difficult to sell than the stock of companies with more active markets.
During the first five months of 1999, the average daily trading volume of our
common stock on The Nasdaq SmallCap Market was approximately 31,000 shares. The
completion of this offering of the common stock provides no assurance that the
trading market for the common stock will become more active.
We have not paid dividends and do not expect to in the foreseeable future, so
our stockholders will not be able to receive a return on their investment
without selling their shares.
We have not paid dividends since our inception and do not expect to in the
foreseeable future, so our shareholders will not be able to receive a return on
their investments without selling their shares. We presently anticipate that
all earnings, if any, will be retained for development of our business. Any
future dividends will be subject to the discretion of our board of directors and
will depend on, among other things, future earnings, our operating and financial
condition, our capital requirements and general business conditions.
Our stockholders could experience dilution in the value of their shares because
of additional issuances of shares.
Any issuance of common stock by us may result in a reduction in the book
value per share or market price per share of our outstanding shares of common
stock and will reduce the proportionate ownership and voting power of such
shares. We have 65,000,000 authorized shares of stock, consisting of 60,000,000
shares of the common stock, and 5,000,000 shares of preferred stock. As of June
11, 1999, approximately 58.3% of the shares of the common stock remained
unissued. The board of directors has the power to issue any and all of such
shares without shareholder approval. It is likely that we will issue shares of
the common stock, among other reasons, in order to raise capital to sustain
operations, to exchange for or to repay our $2.0 million in short-term notes
payable and/or to finance future oil and gas exploration projects. In addition,
we have reserved 6,203,334 and 2/3 shares of the common stock for issuance upon
the exercise of outstanding warrants and 1,950,000 shares of the common stock
for issuance upon the exercise of stock options. As of June 11, 1999, there are
939,944 and 2/3 issued and outstanding options to purchase common stock.
We depend on key personnel and could be seriously harmed if we lost their
services.
10
<PAGE>
We depend on our executive officers for our various activities. We do not
maintain "key person" life insurance policies on any of our personnel nor do we
have employment agreements with any of our personnel. The loss of the services
of any of these individuals could seriously harm us. In addition, our future
success will depend in part upon our ability to attract and retain additional
qualified personnel. We currently have 11 full-time employees.
We depend on industry partners and could be seriously harmed if they do not
perform satisfactorily, which is usually not within our control.
Because we have few employees and limited operating revenues, we will be
largely dependent upon industry partners for the success of our oil and gas
exploration projects for the foreseeable future. We could be seriously harmed
if our industry partners do not perform satisfactorily on projects that affect
us. We may often have no control over factors that would influence their
performance.
We are controlled by a small number of principal stockholders who may exercise a
proportionately larger influence on Cheniere than our shareholders with smaller
holdings.
We are controlled by a small number of principal stockholders who may do
things that are not in the interests of our shareholders with smaller holdings.
William D. Forster and Charif Souki are the co-chairmen of the board of
directors. BSR Investments, Ltd. is an entity under the control of a member of
the immediate family of Charif Souki. Together, Mr. Forster and BSR Investments
own approximately 26.6% of the outstanding common stock. Accordingly, it is
likely that Mr. Forster and BSR Investments will effectively be able to elect
all of our directors and to control our management, operations and affairs,
including the ability to prevent or cause a change in control of the company.
Anti-takeover provisions of the certificate of incorporation, bylaws and
Delaware law could adversely impact a potential acquisition by third parties
that may ultimately be in the financial interests of our shareholders.
Our certificate of incorporation and bylaws and the Delaware General
Corporation Law contain provisions that may discourage unsolicited takeover
proposals. These provisions could have the effect of inhibiting fluctuations in
the market price of our shares that could result from actual or rumored takeover
attempts, preventing changes in our management or limiting the price that
investors may be willing to pay for shares of common stock. These provisions,
among other things, authorize the board of directors to designate the terms of
and issue new series of preferred stock, limit the personal liability of
directors, require us to indemnify directors and officers to the fullest extent
permitted by applicable law and impose restrictions on business combinations
with some interested parties.
11
<PAGE>
CAUTIONARY STATEMENT
REGARDING FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements made by us or on our behalf. We and our
representatives may from time to time make written or verbal forward-looking
statements, including statements contained in this report and other filings with
the Securities and Exchange Commission and in reports to our stockholders.
All statements, other than statements of historical facts, included in this
prospectus that address activities, events or developments that we intend,
expect, project, believe or anticipate will or may occur in the future are
forward-looking statements. These statements include, among others:
- statements regarding our business strategy, plans and objectives;
- statements expressing beliefs and expectations regarding our ability
to successfully raise the additional capital necessary to meet our
obligations under our current exploration agreements;
- statements expressing beliefs and expectations regarding our ability
to secure the leases necessary to facilitate anticipated drilling
activities;
- statements expressing beliefs and expectations regarding our ability
to attract additional working interest owners to participate in the
exploration and development of our exploration areas; and
- statements about non-historical year 2000 information.
These forward-looking statements are, and will be, based on management's
then current views and assumptions regarding future events.
Actual results could differ materially from estimates and other forward-looking
statements. Important factors that could affect us and cause materially
different results are discussed under the heading "Risk Factors" below.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered by
this prospectus. Warrants for which the underlying common stock is being
registered in this registration statement are exercisable at various prices
ranging from $1.00 to $3.125 per share. The detailed terms of our warrants are
set forth under "Description of Securities -- Warrants." We expect to use any
proceeds we receive from the exercise of warrants for ongoing activities related
to the Louisiana joint exploration project, other oil and gas exploration
activities, working capital and/or general corporate purposes.
12
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information known to us with respect to
beneficial ownership of our common stock as of June 11, 1999 by each selling
stockholder. Beneficial ownership is determined in accordance with the rules
and regulations of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Information with respect
to beneficial ownership is based on information as of June 11, 1999 and assumes
that there is outstanding an aggregate of 25,011,977 shares of common stock.
Warrants to purchase shares of common stock which are currently exercisable or
will become exercisable within 60 days of June 11, 1999 are deemed to be
outstanding for purposes of the individuals named in this chart. Except as
indicated otherwise in the footnotes below, and subject to community property
laws where applicable, Cheniere believes based on information furnished by the
selling stockholders that the persons named in the table above have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them. The table assumes the sale of all shares offered
hereby and no other purchases or sales of Cheniere's common stock. All warrants
shown in the applicable column are immediately exercisable.
<TABLE>
<CAPTION>
Amount of Shares
Offered
Hereby
----------------------------------
Shares of Common
Shares Number Stock Underlying
Name of Beneficially of Shares Warrants to Shares Beneficially
Selling Owned Prior of Common Purchase Owned After
Stockholder To Offering Stock Common Stock the Offering
- -------------------------------------------------------------------------------------------------------------------
Number Percent Number Percent
<S> <C> <C> <C> <C> <C> <C>
Alana Group The, Ltd. 562,500 2.2 375,000 187,500 0 *
Alba Limited 145,000 * 20,000 125,000 *
Apex Investment Fund, Ltd. 400,000 1.6 400,000 0 *
Arabella S.A. 2,755,000 10.8 380,000 2,375,000 9.3
Borenstein, Richard N. 75,833 * 40,000 35,833 *
BSR Investments, Ltd. 3,946,445 15.5 400,000 3,546,445 14.1
Connaught Global, Ltd. 300,000 1.2 150,000 150,000 0 *
Cullman, Joseph F. III 37,917 * 20,000 17,917 *
Dulverton Holdings Limited 450,000 1.8 300,000 150,000 0 *
Forster, Gail Daly 132,917 * 20,000 112,917 *
Guildford Manor, Ltd. 400,000 1.6 400,000 0 *
Harvey, Michael L. 1,000,000 3.8 1,000,000 0 *
Hellmold, Ralph O. 256,583 1.0 60,000 196,583 *
Israel, Robert I. 37,917 * 20,000 17,917 *
Kessler, Douglas W., P.C. 72,667 * 34,750 20,000 17,917 *
Lathbury Investments, Ltd. 300,000 1.2 150,000 150,000 0 *
Lessman, Andrew 716,667 2.9 666,667 50,000 *
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Amount of Shares
Offered Hereby
-----------------------------------
Shares of Common
Shares Number Stock Underlying
Name of Beneficially of Shares Warrants to Shares Beneficially
Selling Owned Prior of Common Purchase Owned After
Stockholder To Offering Stock Common Stock the Offering
- -----------------------------------------------------------------------------------------------------------------
Number Percent Number Percent
<S> <C> <C> <C> <C> <C> <C>
MM&B Holdings, L.L.C. 1,195,833 4.6 50,000 787,500 358,333 1.4
Marine Drilling 641,225 2.6 641,225 0 *
Management Company
Moore, James E. 450,000 1.8 300,000 150,000 0 *
Revocable Trust
U/d/t dtd. 7/8/94
Neel, John S. Jr. 98,015 * 40,000 58,015 *
Nomina Finance Limited BVI 450,000 1.8 300,000 150,000 0 *
Oakwood Holdings Limited 450,000 1.8 300,000 150,000 0 *
Olofson, Erik L. II 112,500 * 75,000 37,500 0 *
Peak, Kenneth R. 222,500 * 200,000 22,500 *
Robinson, Joe Sam Jr., M.D. 221,279 * 70,000 151,279 *
Rover Enterprises 650,000 2.6 300,000 150,000 200,000 *
Runnels, G. Tyler 219,178 * 219,178 0 *
Salton, Albin 75,833 * 40,000 35,833 *
Smisson, Hugh F. III, M.D. 234,039 50,000 184,039 *
Three D Holdings, Ltd. 400,000 1.6 400,000 0 *
Union Finance 365,297 1.5 365,297 0 *
International Corporation
Wagstaff, Michael J. 36,667 * 20,000 16,667 *
Totals 17,411,812 * 5,427,117 4,462,500 7,522,195 *
</TABLE>
* Less than 1%.
Mr. Harvey is President and Chief Executive Officer and a Director of
Cheniere. Mr. Peak is currently a Director of Cheniere. BSR Investments, Ltd.
is controlled by Nicole Souki, President of BSR and the mother of Charif
Souki, Chairman of the Board of Cheniere. Charif Souki disclaims beneficial
ownership of the shares owned by BSR.
14
<PAGE>
ISSUANCE OF SECURITIES TO SELLING STOCKHOLDERS
The shares of common stock being registered pursuant to the registration
statement of which this prospectus is a part include
- 5,342,367 shares issued in private placements during the period from
August 1998 to June 1999
- 50,000 shares issued in connection with the extension of the maturity
date of a short-term senior note
- 4,462,500 shares issuable upon the exercise of warrants issued in
private placements or in connection with the extension of the maturity
date of the note
- 34,750 shares issued in exchange for cancellation of a short-term
senior note
In the period from August 31, 1998 through December 15, 1998, we sold
1,950,000 units to seven investors at a price of $0.67 per share pursuant to
Regulation D adopted by the Securities and Exchange Commission. Each unit was
comprised of one share of common stock and one half warrant to purchase one
share of common stock, adding up to 1,950,000 shares of common stock and
warrants to purchase 975,000 shares of common stock. Warrants issued in
connection with these sales of units are exercisable on or before the second
anniversary date of the date the units were sold at an exercise price of $2.00
per share.
In December 1998, we sold 666,667 shares of common stock to one investor at
a price of $0.75 per share pursuant to Regulation D.
In connection with extensions of the maturity date of short-term senior
term notes, we issued 50,000 shares of common stock and warrants to purchase
1,987,500 shares of common stock as follows:
- In September 1998 we issued 50,000 shares of common stock and warrants
to purchase 1,675,000 shares of common stock, of which warrants to
purchase 1,200,000 shares are exercisable on or before September 15,
2002, 800,000 at an exercise price of $1.50 per share and 400,000 at
an exercise price of $1.25 per share, and warrants to purchase 475,000
shares are exercisable on or before September 15, 2003 at an exercise
price of $1.75 per share.
- In October 1998 we issued warrants to purchase 87,500 shares of its
common stock exercisable on or before October 15, 2003 at an exercise
price of $1.75 per share.
- In November 1998 we issued warrants to purchase 100,000 shares of its
common stock exercisable on or before November 15, 2003 at an exercise
price of $1.75 per share.
- In December 1998 we issued warrants to purchase 125,000 shares of its
common stock exercisable on or before December 15, 2003 at an exercise
price of $1.75 per share.
15
<PAGE>
In January 1999 we issued 34,750 shares in exchange for cancellation of a
$25,020 senior note which results in an effective exchange rate of $0.72 per
share.
In April 1999, we issued 584,475 shares of common stock to two investors at
a price of $0.68 per share pursuant to Regulation D adopted by the Securities
and Exchange Commission. We issued the shares in exchange for the cancellation
of a production payment obligation which totaled $400,000.
In April 1999, we sold 300,000 units to three investors at a price of $1.00
per share pursuant to Regulation D adopted by the Securities and Exchange
Commission. Each unit was comprised of one share of common stock and one
warrant to purchase one share of common stock, adding up to 300,000 shares of
common stock and warrants to purchase 300,000 shares of common stock. Warrants
issued in connection with these sales of units are exercisable on or before the
second anniversary date of the date the units were sold at an exercise price of
$1.00 per share.
In June 1999, we issued 1,000,000 warrants to our President and Chief
Executive Officer and 200,000 warrants to another member of our Board of
Directors, both of whom were instrumental in negotiating our license of 8,700
square miles of 3-D seismic data in the Gulf of Mexico. Warrants issued in
connection with this transaction are exercisable on or before the fifth
anniversary of the date the transaction closed at an exercise price of $1.50 per
share.
In June 1999, we issued 641,225 shares of common stock to a drilling company
at a price of $1.50 per share pursuant to Regulation D adopted by the Securities
and Exchange Commission. We issued the shares as payment for drilling services.
In June 1999, we issued 1,200,000 shares of common stock to three investors
at a price of $0.83 per share pursuant to Regulation D adopted by the Securities
and Exchange Commission.
16
<PAGE>
DESCRIPTION OF SECURITIES
We have 65,000,000 authorized shares of stock, consisting of 60,000,000
shares of the common stock, having a par value of $.003 per share, and 5,000,000
shares of preferred stock, having a par value of $.0001 per share.
COMMON STOCK
As of June 11, 1999, there were 25,011,977 shares of the common stock
outstanding. All of such outstanding shares of common stock are fully paid and
nonassessable. Each share of the common stock has an equal and ratable right to
receive dividends when, as and if declared by the Board of Directors of Cheniere
out of assets legally available therefor and subject to the dividend obligations
of Cheniere to the holders of any preferred stock then outstanding.
In the event of a liquidation, dissolution or winding up of Cheniere, the
holders of common stock are entitled to share equally and ratably in the assets
available for distribution after payment of all liabilities, and subject to any
prior rights of any holders of preferred stock that at the time may be
outstanding.
The holders of common stock have no preemptive, subscription, conversion or
redemption rights, and are not subject to further calls or assessments of
Cheniere. There are no sinking fund provisions applicable to the common stock.
Each share of common stock is entitled to one vote in the election of directors
and on all other matters, submitted to a vote of stockholders. Holders of
common stock have no right to cumulate their votes in the election of directors.
PREFERRED STOCK
As of the date of this prospectus, there were no shares of preferred stock
outstanding. Preferred stock may be issued from time to time in one or more
series, and the board of directors, without further approval of the
stockholders, is authorized to fix the dividend rates and terms, conversion
rights, voting rights, redemption rights and terms, liquidation preferences and
any other rights, preferences, privileges and restrictions applicable to each
series of preferred stock. The purpose of authorizing the board of directors to
determine such rights, preferences, privileges and restrictions is to eliminate
delays associated with a stockholder vote on specific issuances. The issuance
of preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of common stock and, under some
circumstances, make it more difficult for a third party to gain control of
Cheniere.
17
<PAGE>
WARRANTS
We have issued and outstanding the warrants described in this prospectus.
We are registering the common stock issuable upon the exercise of a portion of
such warrants pursuant to the registration statement of which this prospectus is
a part.
We have issued and outstanding 141,666 and 2/3 warrants, each of which
entitles the registered holder thereof to purchase one share of common stock.
These warrants are exercisable at any time on or before June 14, 2000, at an
exercise price of $3.00 per share and are subject to customary anti-dilution
adjustments. These warrants were originally issued by Cheniere Energy Operating
Co., Inc. (now a wholly owned subsidiary of Cheniere) and were converted to
warrants of Cheniere following the 1996 reorganization of the company. These
warrants were issued to a group of 11 investors in connection with a private
placement of unsecured promissory notes of Cheniere Operating in the aggregate
principal amount of $425,000. In connection with the payment of an additional
promissory note to one such investor, Cheniere has issued to such investor an
additional warrant to purchase 64,500 shares of the common stock (on the same
terms as the other warrants), in accordance with the terms of the original Note
Agreement, which expires on June 14, 2000.
In consideration of investment advisory and other services to Cheniere,
pursuant to warrant agreements each dated as of August 21, 1996, we issued to
C.M. Blair, W.M. Foster & Co., Inc. and Redliw Corp. warrants to purchase 13,600
and 54,400 shares of common stock, respectively. These warrants are exercisable
at any time on or before May 15, 2000 at an exercise price of $3.00 per share
and are subject to customary anti-dilution adjustments.
In connection with the December 1997 Bridge Financing, we issued 100,000
shares of common stock and four-year warrants to purchase 1,333,334 shares of
common stock at $2-3/8 per share. Additional warrants to purchase 1,600,000
shares of Cheniere common stock were issued on September 15, 1998 in
consideration for the extension to that date. The notes were extended again in
September 1998 to a maturity date of December 15, 1998, which date was further
extended to January 15, 1999 at the option of Cheniere. In connection with the
extension to December 15, 1998, we offered two alternatives of consideration.
Holders of $3,000,000 of the notes elected to reduce the exercise price of their
warrants to $1.50. The holder of $1,000,000 of the notes elected to reduce the
exercise price of its warrants to $2.00 per share, to extend the term of such
warrants to five years from the latter of September 15, 1998 or the date of
issue, to receive additional warrants to purchase as many as 387,500 shares of
common stock and to receive 50,000 shares of common stock. On March 15, 1999, in
connection with an extension of the maturity date of the notes, Cheniere reduced
the exercise price by $0.25 per share for all 1,854,167 warrants related to the
then-outstanding notes.
In conjunction with a private placement of common stock in March 1997
Cheniere issued 50,000 warrants to a financial advisor. The warrants were
issued in March 1998 at an exercise price of $3.125 per share and are
exercisable on or before March 31, 2000.
In conjunction with the issuance of $180,000 senior term notes payable in
June 1998, Cheniere issued warrants to purchase 83,334 shares of common stock at
an exercise price of $2.00 per share. Such warrants are exercisable
18
<PAGE>
on or before June 4, 2002 at an exercise price of $2.00 per share and are
subject to customary anti-dilution adjustments.
In the period from August 31, 1998 through December 15, 1998, we sold
1,950,000 units, each unit consisting of one share of common stock and one half
warrant to purchase one share of common stock, in the aggregate, 1,950,000
shares of common stock and warrants to purchase 975,000 shares of common stock.
Each warrant is exercisable on or before the second anniversary of the date the
units were sold at an exercise price of $2.00 per share and are subject to
customary anti-dilution adjustments.
In April 1999, we sold 300,000 units to three investors at a price of $1.00
per share pursuant to Regulation D adopted by the Securities and Exchange
Commission. Each unit was comprised of one share of common stock and one
warrant to purchase one share of common stock, adding up to 300,000 shares of
common stock and warrants to purchase 300,000 shares of common stock. Warrants
issued in connection with these sales of units are exercisable on or before the
second anniversary date of the date the units were sold at an exercise price of
$1.00 per share.
In June 1999, we issued 1,000,000 warrants to our President and Chief
Executive Officer and 200,000 warrants to another member of our Board of
Directors, both of whom were instrumental in negotiating our license of 8,700
square miles of 3-D seismic data in the Gulf of Mexico. Warrants issued in
connection with this transaction are exercisable on or before the fifth
anniversary of the date the transaction closed at an exercise price of $1.50 per
share.
The warrants do not confer upon the holders thereof any voting or other
rights of a stockholder of Cheniere.
POSSIBLE ANTI-TAKEOVER PROVISIONS
The amended and restated certificate of incorporation of Cheniere contains
provisions that might be characterized as anti-takeover provisions. Such
provisions may render more difficult possible takeover proposals to acquire
control of Cheniere and make removal of management of Cheniere more difficult.
As described above, the certificate of incorporation authorizes a class of
undesignated preferred stock consisting of 5,000,000 shares. Preferred stock
may be issued from time to time in one or more series, and the board of
directors, without further approval of the stockholders, is authorized to fix
the rights, preferences, privileges and restrictions applicable to each series
of preferred stock. The purpose of authorizing the board of directors to
determine such rights, preferences, privileges and restrictions is to eliminate
delays associated with a stockholder vote on specific issuances. The issuance
of preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of common stock and, under some
circumstances, make it more difficult for a third party to gain control of
Cheniere.
19
<PAGE>
Cheniere is incorporated under the laws of the State of Delaware. Section
203 of the Delaware General Corporation Law prevents an interested stockholder
from engaging in a business combination with such corporation for a period of
three years from the time such stockholder became an interested stockholder
unless at least one of the following conditions is met:
- the corporation's board of directors had earlier approved either the
business combination or the transaction by which the stockholder
became an interested stockholder,
- upon attaining that status, the interested stockholder had acquired at
least 85 percent of the corporation's voting stock, not counting
shares owned by persons who are directors and also officers, or
- the business combination is later approved by the board of directors
and authorized by a vote of two-thirds of the stockholders, not
including the shares held by the interested stockholder.
The Delaware General Corporation Law defines an interested stockholder as a
stockholder owning 15 percent or more of a corporation's voting stock. Cheniere
is currently subject to Section 203.
In addition, William D. Forster, co-chairman of the board of directors of
Cheniere, and BSR Investments, Ltd., an entity under the control of a member of
the immediate family of Charif Souki, co-chairman of the board of directors of
Cheniere, own in the aggregate approximately 26.6% of the outstanding shares of
the common stock. Accordingly, it is likely that Mr. Forster and BSR
Investments will have the ability to effectively prevent or cause a change in
control of Cheniere.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is U.S. Stock
Transfer Corporation.
PLAN OF DISTRIBUTION
We have agreed to bear some expenses of registration of the shares offered
by this prospectus under federal and state securities laws.
Shares of common stock covered hereby may be offered and sold from time to
time by the selling stockholders. The selling stockholders will act
independently of Cheniere in making decisions with respect to the timing, manner
and size of each sale. The selling stockholders may sell the shares being
offered by this prospectus:
- on the Nasdaq SmallCap Market, or otherwise at prices and at terms
then prevailing or at prices related to the then current market price; or
20
<PAGE>
- in private sales at negotiated prices directly or through a broker or
brokers, who may act as agent or as principal or by a combination of such
methods of sale.
The selling stockholders and any underwriter, dealer or agent who
participate in the distribution of such shares may be deemed to be
"underwriters" under the federal securities act, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act. Cheniere has agreed to
indemnify the selling stockholders against some liabilities arising under the
federal securities act.
Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholders and, if acting as agent for the
purchaser of such shares, from such purchaser. Usual and customary brokerage
fees will be paid by the selling stockholders. Broker-dealers may agree with
the selling stockholders to sell a specified number of shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for the selling stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the selling stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions in the over-the-
counter market, in negotiated transactions or by a combination of such methods
of sale or otherwise. These transactions would be at market prices prevailing
at the time of sale or at negotiated prices. These transactions may involve
crosses and block transactions and may involve sales to and through other
broker-dealers, including transactions of the nature described above. In
connection with such resales the broker-dealers may pay to or receive from the
purchasers of the shares commissions computed as described above.
Under the rules and regulations under the Securities Exchange Act of 1934,
the selling stockholders may be persons engaged in the distribution of the
common stock and may not simultaneously engage in market making activities with
respect to Cheniere for a period of five business days prior to the commencement
of the distribution. In addition, the selling stockholders will be subject to
applicable provisions, rules and regulations under the Securities Exchange Act
of 1934, including Regulation M, which may limit the timing of purchases and
sales of shares of common stock by the selling stockholders.
The selling stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against some liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal.
In order to comply with the securities laws of some states, if applicable,
the common stock will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states, the common stock may
not be sold unless such shares have been registered or
21
<PAGE>
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Cheniere will keep this registration statement or a similar registration
statement effective until the earlier to occur of
- the date that all securities registered under this registration
statement have been disposed of in accordance with the plan of disposition
indicated above or
- the date that all securities registered under this registration
statement have become eligible for sale under Rule 144(k) under the
Securities Act.
No sales may be made pursuant to this prospectus after the earlier of these
two dates unless Cheniere amends or supplements this prospectus to indicate that
it has agreed to extend such period of effectiveness.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Mayor, Day, Caldwell & Keeton, L.L.P., Houston, Texas, counsel to
Cheniere.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to Cheniere's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 have been so incorporated in reliance on the report (which
contains an explanatory paragraph relating to Cheniere's ability to continue as
a going concern as described in Note 13 to the consolidated financial
statements) of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Cheniere will bear no expenses in connection with any sale or other
distribution by the selling stockholders of the shares being registered other
than the expenses of preparation and distribution of this registration statement
and the prospectus included in this registration statement. Such expenses are
set forth in the following table. All of the amounts shown are estimates except
the Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $ 4,409
Legal fees and expenses 10,000
Accounting fees and expenses 2,000
Miscellaneous expenses 1,091
Total $17,500
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under some circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933. Cheniere's certificate of incorporation and by-laws
provide for indemnification of Cheniere's directors, officers, employees and
other agents to the extent and under the circumstances permitted by the Delaware
General Corporation Law. Cheniere has also entered into agreements with its
directors and officers that will require Cheniere, among other things, to
indemnify them against some liabilities that may arise by reason of their status
or service as directors to the fullest extent not prohibited by law. In
addition, Cheniere carries director and officer liability insurance.
In connection with this offering, the selling stockholders have agreed to
indemnify Cheniere, its directors and officers and each such person who controls
Cheniere, against any and all liability arising from inaccurate information
provided to Cheniere by the selling stockholders and contained herein.
Item 16. Exhibits.
Exhibits.
4.1 Specimen Common Stock Certificate of Cheniere (Incorporated by
reference to Exhibit 4.1 of Cheniere's registration statement
under the Securities Act of 1933 on Form S-1 filed on August
27, 1996 (File No. 333-10905))
5.1 Opinion of Mayor, Day, Caldwell & Keeton, L.L.P.
23.1 Consent of Mayor, Day, Caldwell & Keeton, L.L.P. (included in
Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
II-1
<PAGE>
24.1 Powers of Attorney (included on signature page to original
registration statement filing)
Item 17. Undertakings.
Cheniere hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of Cheniere's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Cheniere
pursuant to the foregoing provisions, or otherwise, Cheniere has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Cheniere of expenses
incurred or paid by a director, officer or controlling person of Cheniere in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Cheniere will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Cheniere
Energy, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Houston, State of Texas, on June 11, 1999.
CHENIERE ENERGY, INC.
By: /s/ MICHAEL L. HARVEY
Michael L. Harvey
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ MICHAEL L. HARVEY President, Chief Executive June 11, 1999
Michael L. Harvey Officer and Director
(Principal Executive Officer)
/s/ DON A. TURKLESON Chief Financial Officer June 11, 1999
Don A. Turkleson (Principal Financial and
Accounting Officer)
*___________________ Co-Chairman of the Board June 11, 1999
William D. Forster
*___________________ Co-Chairman of the Board June 11,, 1999
Charif Souki
*___________________ Director June 11, 1999
Kenneth R. Peak
*___________________ Director June 11, 1999
Charles M. Reimer
*___________________ Vice Chairman of the Board June 11, 1999
Walter L. Williams
*___________________ Director June 11, 1999
Efrem Zimbalist, III
*/s/ DON A. TURKLESON June 11, 1999
Don A. Turkleson,
attorney-in-fact
</TABLE>
II-3
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF MAYOR, DAY, CALDWELL & KEETON, L.L.P.]
JUNE 14, 1999
Cheniere Energy, Inc.
1200 Smith Street, Suite 1740
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel for Cheniere Energy, Inc., a Delaware corporation
(the "Company"), in connection with the registration of up to an aggregate of
9,889,617 (the "Shares") of Common Stock, par value $0.003 per share, of the
Company ("Common Stock"), to be sold by certain selling stockholders of the
Company as described in the Company's Registration Statement on Form S-3, filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended ("Registration Statement"). In such capacity, we have familiarized
ourselves with the Articles of Incorporation, as amended to date, and Bylaws of
the Company, as amended to date, and have examined all statutes and other
records, instruments and documents pertaining to the Company that we have deemed
necessary to examine for the purposes of this opinion.
Based upon our examination as aforesaid, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware; and
2. The Shares currently outstanding are, and the Shares underlying
warrants when delivered for sufficient consideration and pursuant to the
provisions of the warrants will be, duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of our name in the Registration Statement at each place in which it appears.
Sincerely,
/s/ Mayor, Day Caldwell & Keeton, L.L.P.
----------------------------------------
Mayor, Day, Caldwell & Keeton, L.L.P.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 15, 1999, except as to Note 12
which is as of March 26, 1999, relating to the financial statements, which
appears on page 19 of Cheniere Energy, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1998. We also consent to the reference to us
under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
June 14 1999
Houston, Texas
