<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
Form 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1999
Commission File No. 0-9092
CHENIERE ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4352386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Smith Street, Suite 1740
Houston, Texas 77002-4312 77002-4312
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 659-1361
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $ 0.003 PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of the registrant's common stock held by non-
affiliates of the registrant was approximately $36,290,457 as of March 24, 2000
(based upon the March 24, 2000 closing market price of such common stock as
reported by the Nasdaq SmallCap Market). 42,381,973 shares of the registrant's
Common Stock were outstanding as of March 24, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
The registrant hereby amends the following items of its Annual Report on
Form 10-K for the year ended December 31, 1999, as set forth on the pages
attached hereto:
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Item 13. Certain Relationships and Related Transactions
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Directors of the Registrant
The following sets forth certain information concerning each of the
directors of the Company.
Directors Director Since Age Position
--------- -------------- --- --------
William D. Forster 1996 53 Director
Michael L. Harvey 1999 52 Director, President and
Chief Executive Officer
Kenneth R. Peak 1997 54 Director
Charles M. Reimer 1998 55 Director
Charif Souki 1996 47 Director and Chairman of
the Board of Directors
Walter L. Williams 1996 72 Director and Vice Chairman
William D. Forster, a co-founder of Cheniere, is currently a director of
Cheniere and a member of the Audit Committee, the Compensation Committee and the
Stock Option Committee. Mr. Forster is Chairman and CEO of Stonington
Corporation in New York, NY. He served as President and Chief Executive Officer
of Cheniere from July 1996 to November 1997 and as Co-Chairman of the Board from
November 1997 to June 1999. Mr. Forster was an investment banker with Lehman
Brothers from 1975 to 1990, serving as a Managing Director for eleven years,
initially in the oil and gas department for seven years, and then in various
other areas. In 1990, he founded his own private investment bank, W. Forster &
Co. Inc. Mr. Forster is a director of Equity Oil Company, a Nasdaq National
Market company. Mr. Forster holds a B.A. in economics from Harvard College and
an M.B.A. from Harvard Business School. Mr. Forster is not standing for
reelection to the Board of Directors.
Michael L. Harvey is currently President and Chief Executive Officer and a
director of Cheniere. Mr. Harvey was elected President and Chief Executive of
the Company in June 1999. Earlier in 1999, Mr. Harvey formed Vaquero Capital
Partners, which provided investment banking and capital formation for
independent oil and gas companies. Mr. Harvey continues as Chairman of Estrella
del Golfo, LLC, which he co-founded in 1996 to conduct exploration and
production asset management in Venezuela. Mr. Harvey began his career in 1973
with Shell Oil Company in Corporate Planning and Economics. He served as Manager
of Land Operations for General Crude Oil Company from 1977 to 1979, when he
joined Roy M. Huffington, Inc. as Vice President. In 1987, Mr. Harvey founded
Gulfstar Petroleum Corporation, Gulfstar Operating Company and Gulfstar Energy,
Inc. He served as President and CEO of the companies until 1997, when Gulfstar
Energy was merged into Domain Energy Corporation (now Range Resources). He was
Executive Vice President and a director for Domain in 1998. Mr. Harvey resigned
from Domain Energy Corporation upon its merger into Range Resources. Mr. Harvey
is a graduate of Texas A&M University and serves on the Financial Advisory Board
of Texas A&M University School of Business.
2
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Kenneth R. Peak is currently a director of the Company and a member of the
Audit Committee, the Compensation Committee, and the Stock Option Committee. Mr.
Peak is also President and CEO of Contango Oil & Gas Company in Houston. Prior
to joining Contango in 1999, Mr. Peak had been the President of Peak Enernomics,
Incorporated, a company engaged in consulting activities in the oil and gas
industry, since forming the company in 1990. From 1989 to 1990, Mr. Peak served
as a Managing Director and Co-Manager, Corporate Finance of Howard Weil
Incorporated, an investment banking firm. Prior to joining Howard Weil
Incorporated, Mr. Peak served as Vice President-Finance for Forest Oil
Corporation from 1988 to 1989. Mr. Peak received a B.S. in physics from Ohio
University and an M.B.A. from Columbia University. He currently serves as a
director of NL Industries, Inc. and Contango Oil & Gas Company.
Charles M. Reimer is currently a director of Cheniere and a member of the
Audit Committee, the Compensation Committee, and the Stock Option Committee. He
is also President of British-Borneo USA, Inc. in Houston. Prior to joining
British Borneo in November 1998, Mr. Reimer served as Chairman and CEO of
Virginia Indonesia Company (VICO), the operator on behalf of Union Texas
Petroleum Holdings, Inc. and LASMO plc, of major gas and oil reserves and
production located in East Kalimantan, Indonesia. Mr. Reimer began his career
with Exxon Company USA in 1967 and held various professional and management
positions in Texas and Louisiana. After leaving Exxon, Mr. Reimer was named
President of Phoenix Resources Company in 1985 and relocated to Cairo, Egypt to
begin eight years of international assignments.
Charif Souki, a co-founder of Cheniere, is currently Chairman of the Board
of Directors of the Company and a member of the Stock Option Committee. Mr.
Souki is an independent investment banker with 20 years of experience in the
industry. In the past few years he has specialized in providing financing for
promising microcap and small capitalization companies with an emphasis on the
oil and gas industry. Mr. Souki received his B.A. from Colgate University and
his M.B.A. from Columbia University.
Walter L. Williams is currently Vice Chairman and a director of the
Company. Prior to joining the Company, Mr. Williams spent 32 years as a founder
and later Chairman and Chief Executive Officer of Texoil, Inc., a publicly held
Gulf Coast exploration and production company. Prior to that time, he was an
independent petroleum consultant. Mr. Williams received a B.S. in petroleum
engineering from Texas A&M University and is a Registered Engineer in Louisiana
and Texas. He has served as a director and member of the Executive Committee of
the Board of the Houston Museum of Natural Science.
Efrem Zimbalist III resigned from the Board effective September 10, 1999.
It is anticipated that William Forster will not be standing for re-election at
the annual meeting of stockholders. The Company has not yet determined whether
there will be any additional nominees.
Executive Officers of the Registrant
The following table sets forth the names, ages and positions of each
executive officer of the Company, all of whom serve at the pleasure of the Board
of Directors and are subject to annual appointment by the Board:
Name Age Position
- ------------------- ------ -----------------------------------------------
Charif Souki 47 Chairman
Walter L. Williams 72 Vice Chairman
Michael L. Harvey 52 President and Chief Executive Officer
Ron A. Krenzke 47 Executive Vice President - Exploration
Keith F. Carney 43 Executive Vice President - Business Development
Don A. Turkleson 45 Chief Financial Officer, Secretary & Treasurer
Charif Souki served as Co-Chairman of the Board of Directors until June 4,
1999, when he was elected Chairman. Mr. Souki also served as a director of the
Company throughout the fiscal year ended December 31, 1999. Further information
regarding Mr. Souki is provided above under "Directors of the Registrant."
Walter L. Williams currently serves as Vice Chairman of the Company. Mr.
Williams served as President, Chief Executive Officer and a director of the
Company during the fiscal year ended December 31, 1999. Further information
regarding Mr. Williams is provided above under "Directors of the Registrant."
3
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Michael L. Harvey is currently President and Chief Executive Officer and a
director of Cheniere. Mr. Harvey served as a director of Cheniere throughout the
fiscal year ended December 31, 1999. Further information regarding Mr. Harvey is
provided above under "Directors of the Registrant."
Ron A. Krenzke is currently Executive Vice President - Exploration for
Cheniere. Prior to joining Cheniere, Mr. Krenzke was Executive Vice President
and Chief Operating Officer of XPLOR Energy, Inc. Mr. Krenzke started his career
as a geophysicist in 1974 and has since held various technical and management
positions at Mobil Oil, Texas Eastern, Monsanto Oil, and Amerada Hess. In 1990,
he founded South Coast Exploration Company and Interactive Exploration
Solutions, Inc. (INEXS), where he served as President and director,
respectively. In 1997, these companies were merged with XPLOR Energy.
Keith F. Carney is currently Executive Vice President - Business
Development of Cheniere. He served as Chief Financial Officer and Treasurer of
the Company from July 1996 through November 1997. Prior to joining Cheniere, Mr.
Carney was a securities analyst in the oil and gas exploration/production sector
with Smith Barney, Inc. from 1992-1996. From 1982-1990 he was employed by Shell
Oil as an exploration geologist, with assignments in the Gulf of Mexico, the
Middle East and other areas. He received an M.S. in geology from Lehigh
University in 1982 and an M.B.A.-Finance from the University of Denver in 1992.
Mr. Carney currently serves as a director for Pyr Energy.
Don A. Turkleson is currently Chief Financial Officer, Secretary and
Treasurer of Cheniere. Prior to joining Cheniere, Mr. Turkleson was employed by
PetroCorp Incorporated from 1983 to 1996, as Controller until 1986, then as Vice
President - Finance, Secretary and Treasurer. From 1975 to 1983, he worked as a
Certified Public Accountant in the natural resources division of Arthur Andersen
& Co. in Houston. Mr. Turkleson received a B.S. in accounting from Louisiana
State University in 1975. He is a director, Treasurer and past Chairman of the
Board of Neighborhood Centers, Inc., a nonprofit organization.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Exchange Act, directors, certain officers, and
beneficial owners of 10% or more of any class of the Company's stock ("Reporting
Persons") are required from time to time to file with the Securities and
Exchange Commission and the NASDAQ SmallCap Market reports of ownership and
changes of ownership. Reporting Persons are required to furnish the Company with
copies of all Section 16(a) reports they file. Based solely on its review of
forms and written representations received from Reporting Persons by it with
respect to the fiscal year ended December 31, 1999, the Company believes that
all filing requirements applicable to the Company's officers, directors and
greater than 10% stockholders have been met except that an initial report on
Form 3 for Arabella SA and a change in beneficial ownership report on Form 4 for
BSR Investments, Ltd. were filed late.
ITEM 11. EXECUTIVE COMPENSATION.
The following table reflects all compensation received by the chief
executive officer and by each of the five other most highly compensated
executive officers of the Company during the three years ended December 31,
1999, 1998 and 1997 (collectively, the "Named Executives"). Mr. Forster did not
receive compensation sufficient to require that he be included in this table.
4
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
------------------- --------------------------
Other Annual Securities Underlying
Name and Principal Position Year Salary Compensation Options/SARs (#)
- --------------------------- ----- ------ ------------ --------------------------
<S> <C> <C> <C> <C>
Charif Souki 1999 $120,000 - -
Chairman 1998 $ 30,000 (1) - -
1997 - - -
Walter L. Williams 1999 $120,000 - 100,000
Vice Chairman (former President 1998 $120,000 - -
and Chief Executive Officer) 1997 $120,000 - 50,000
Michael L. Harvey 1999 $102,087 (2) - 1,035,000 (2)
President and 1998 - - -
Chief Executive Officer 1997 - - -
Ron A. Krenzke 1999 $ 96,250 (3) 37,500 (3) 600,000
Executive Vice President - 1998 - - -
Exploration 1997 - - -
Keith F. Carney 1999 $100,000 - 100,000
Executive Vice President - 1998 $100,000 - -
Business Development 1997 $ 90,833 (4) - 50,000
Don A Turkleson 1999 $100,000 - 100,000
Chief Financial Officer, 1998 $100,000 - -
Secretary and Treasurer 1997 $ 8,333 (5) - 50,000
</TABLE>
(1) On October 1, 1998, Mr. Souki commenced providing consulting services to
the Company pursuant to a Services Agreement and is compensated at a rate
of $10,000 per month.
(2) Mr. Harvey's 1999 salary was payment for seven months of employment, based
on an annual salary of $175,000, beginning on his June 1, 1999 date of
hire. Mr. Harvey received stock options to purchase 35,000 shares of
Common Stock when he was elected to the Board of Directors in March 1999.
He received warrants to purchase 1,000,000 shares of Common Stock in June
1999.
(3) Mr. Krenzke's 1999 salary was payment for seven months of employment, based
on an annual salary of $165,000, beginning on his June 1, 1999 date of
hire. Mr. Krenzke's Other Annual Compensation represents 150,000 shares of
Common Stock, valued at $0.25 per share, received in conjunction with Mr.
Krenzke's employment by Cheniere.
(4) Effective December 1, 1997, Mr. Carney's annual salary was increased from
$90,000 to $100,000.
(5) Mr. Turkleson's salary for the year ended December 31, 1997 was payment for
one month of employment from his inception date of December 1, 1997 based
on an annual salary of $100,000.
5
<PAGE>
Option Grants
Stock options granted to Named Executives during the year ended December
31, 1999 are summarized in the following table:
<TABLE>
<CAPTION>
Potential Realizable Value
Individual Grants at Assumed Annual Rates
- ----------------------------------------------------------------------------------------------
% of Total of Stock Price Appreciation
Options/SARs Exercise or for Option Term
Granted to Employees Base Price Expiration --------------------------------
Name Granted in Fiscal Period Per Share Date 5% 10%
- ------------------ ----------- ---------------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Charif Souki - - - - - -
Walter L. Williams 100,000 4.00% $1.50 09/30/2004 $ 11,108 $ 50,407
Michael L. Harvey 1,000,000 39.90% $1.50 06/08/2004 $294,452 $764,377
35,000 1.40% $3.00 09/30/2004 - -
Ron A. Krenzke 600 ,000 23.90% $1.50 09/30/2004 $ 62,325 $291,904
Keith F. Carney 100,000 4.00% $1.50 09/30/2004 $ 11,108 $ 50,407
Don A. Turkleson 100,000 4.00% $1.50 09/30/2004 $ 11,108 $ 50,407
</TABLE>
Outside members of the Board of Directors (those who do not serve as
executive officers of the Company) are compensated for their services to the
Company through the grant of options to purchase Common Stock of the Company. In
March 1999, prior to his election as President and Chief Executive Officer of
the Company, Mr. Harvey received options to purchase 35,000 shares of Common
Stock at an exercise price of $3.00 per share on or before March 17, 2004. The
term of these options was later extended to September 30, 2004. In addition, in
consideration of their contributions to Cheniere's acquisition of 3-D seismic
data covering 8,700 square miles in the Gulf of Mexico, the Company granted to
Mr. Harvey and Mr. Peak warrants to purchase 1,000,000 and 200,000 shares of
Common Stock, respectively, each at an exercise price of $1.50 per share on or
before June 8, 2004. No other grants of stock options or warrants were made to
directors during 1999.
6
<PAGE>
Option Exercises and Year-End Values
The following table sets forth information regarding unexercised options or
warrants to purchase shares of Common Stock granted by the Company to Named
Executives. No Named Executives exercised any Common Stock options during the
fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the Money
Unexercised Options/SARs at December 31, 1999 Options/SARs at December 31, 1999 (1)
------------------------------------------------------ -----------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----------------- --------------------- ------------------ ------------------- -------------------
<S> <C> <C> <C> <C>
Charif Souki - - - -
Walter L. Williams 175,000 125,000 - -
Michael L. Harvey 1,000,000 35,000 - -
Ron A. Krenzke 300,000 300,000 - -
Keith F. Carney 137,500 162,500 - -
Don A. Turkleson 25,000 125,000 - -
</TABLE>
(1) The value of unexercised options and warrants to purchase Common Stock at
December 31, 1999 is nil since the $.72 per share market value of the
underlying securities at December 31, 1999 was less than the exercise
prices.
Indemnification of Officers and Directors
The Company's Certificate of Incorporation provides that the liability of
directors for monetary damages shall be limited to the fullest extent
permissible under Delaware law. This limitation of liability does not affect the
availability of injunctive relief or other equitable remedies.
The Company's Certificate of Incorporation and Bylaws provide that the
Company shall indemnify its directors and officers to the fullest extent
possible under Delaware law. These indemnification provisions require the
Company to indemnify such persons against certain liabilities and expenses to
which they may become subject by reason of their service as a director or
officer of the Company or any of its affiliated enterprises. The provisions also
set forth certain procedures, including the advancement of expenses, that apply
in the event of a claim for indemnification.
Director Compensation
During the fiscal year ended December 31, 1999, directors received no cash
remuneration for serving on the Board of Directors of the Company, nor were they
compensated for attending Board or committee meetings. From time to time,
outside members of the Board of Directors (those who do not serve as executive
officers of the Company) are compensated for their services to the Company
through the grant of options to purchase Common Stock of the Company. In March
1999, prior to his election as President and Chief Executive Officer of the
Company, Mr. Harvey received options to purchase 35,000 shares of Common Stock
at an exercise price of $3.00 per share on or before March 17, 2004. The term
of these options was later extended to September 30, 2004.
In addition, in consideration of their contributions to Cheniere's
acquisition of 3-D seismic data covering 8,700 square miles in the Gulf of
Mexico, the Company granted to Mr. Harvey and Mr. Peak warrants to purchase
1,000,000 and 200,000 shares of Common Stock, respectively, each at an exercise
price of $1.50 per share on or before June 8, 2004.
7
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Compensation Committee Interlocks and Insider Participation
In addition to serving as a director of the Company, several directors held
positions as executive officers during the fiscal year ended December 31, 1999.
Mr. Forster served as Co-Chairman of the Board until June 4, 1999. Mr. Souki
served as Co-Chairman of the Board until June 4, 1999 and then as Chairman of
the Board. Mr. Williams served as President and Chief Executive Officer until
June 4, 1999 and then as Vice Chairman of the Board. Mr. Harvey served as
President and Chief Executive Officer, commencing on June 4, 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information with respect to the shares of
Common Stock owned of record and beneficially as of April 25, 2000 by all
persons who own of record or are known by the Company to own beneficially more
than 5% of the outstanding Common Stock, by each director, and Named Executive,
and by all directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership of Class
- ------------------------------------------------------------- ------------------------------- -------------------
<S> <C> <C>
Arabella SA 4,445,000 (1) 10.1%
Azure Energy Fund, Inc. 3,000,030 (2) 7.0%
BSR Investments, Ltd. 4,124,645 (3) 9.5%
Keith F. Carney 150,000 (4) *
William D. Forster 2,846,211 (5) 6.6%
Michael L. Harvey 1,022,500 (6) 2.3%
Ron A. Krenzke 450,000 (7) 1.0%
Kenneth R. Peak 235,000 (8) *
Charles M. Reimer 63,571 (9) *
Charif Souki - (10) *
Don A. Turkleson 62,500 (11) *
Walter L. Williams 217,500 (12) *
All directors and executive officer as a group of (9 persons) 5,047,282 (13) 11.2%
</TABLE>
* - Less than 1%
(1) Includes warrants to purchase 855,000 shares of the Company's Common Stock
held by Arabella S.A. Arabella's address is: 35, rue Glesener, L-1621,
Luxembourg.
(2) The address of Azure Energy Fund, Inc. is: c/o Azure Capital Management
Ltd., c/o Scotia McLeod, Suite 1800, 700 2/nd/ Street S.W., Calgary
Alberta, T2P-2W1, Canada.
(3) BSR Investments, Ltd. is controlled by Nicole Souki, the President of BSR
and the mother of Charif Souki. Charif Souki disclaims beneficial
ownership of the shares. Includes warrants to purchase 621,667 shares of
the Company's Common Stock. BSR's address is c/o Harney, Westwood &
Riegels, Box 71, Craigmuir Chambers, Road Town, Tortola, B.V.I.
(4) Includes 137,500 shares issuable upon exercise of presently exercisable
options and 12,500 shares issuable upon exercise of options which become
exercisable within 60 days of the filing of this Form 10-K/A. Excludes
150,000 shares issuable upon the exercise of options held by Mr. Carney but
not exercisable within 60 days of the filing of this Form 10-K/A.
(5) Does not include 100,000 shares held by a trust for the benefit of Mr.
Forster's mother of which Mr. Forster is a 20% remainderman and of which
shares he disclaims beneficial ownership. Mr. Forster's address is c/o
Cheniere Energy, Inc., 1200 Smith Street, Suite 1740, Houston, TX 77002-
4312.
(6) Includes 22,500 shares issuable upon exercise of presently exercisable
options and 1,000,000 shares issuable upon exercise of presently
exercisable warrants. Excludes 12,500 shares issuable upon the exercise of
options held by Mr. Harvey but not exercisable within 60 days of the filing
of this Form 10-K/A.
8
<PAGE>
(7) Includes 300,000 shares issuable upon exercise of presently exercisable
options. Excludes 300,000 shares issuable upon the exercise of options
held by Mr. Krenzke but not exercisable within 60 days of the filing of
this Form 10-K/A.
(8) Includes 35,000 shares issuable upon exercise of presently exercisable
options and 200,000 shares issuable upon exercise of presently exercisable
warrants held by Mr. Peak.
(9) Includes 35,000 shares issuable upon exercise of presently exercisable
options held by Mr. Reimer.
(10) Does not include 3,498,578 shares nor warrants to purchase 626,067 shares
of Cheniere Common Stock held by BSR Investments, Ltd. of which Charif
Souki disclaims beneficial ownership. BSR Investments, Ltd. is controlled
by Nicole Souki, the President of BSR Investments, Ltd. and the mother of
Charif Souki.
(11) Includes 25,000 shares issuable upon exercise of presently exercisable
options and 12,500 shares issuable upon exercise of options which become
exercisable within 60 days of the filing of this Form 10-K/A. Excludes
112,500 shares issuable upon the exercise of options held by Mr. Turkleson
but not exercisable within 60 days of the filing of this Form 10-K/A.
(12) Includes 175,000 shares issuable upon exercise of presently exercisable
options and 12,500 shares issuable upon exercise of options which become
exercisable within 60 days of the filing of this Form 10-K/A. Excludes
137,500 shares issuable upon the exercise of options held by Mr. Williams
but not exercisable within 60 days of the filing of this Form 10-K/A.
(13) Includes an aggregate of 730,000 shares issuable upon exercise of
presently exercisable options, 37,500 shares issuable upon exercise of
options which become exercisable within 60 days of the filing of this Form
10-K/A, and 1,200,000 shares issuable upon exercise of presently
exercisable warrants. Excludes an aggregate of 712,500 shares issuable
upon the exercise of options not exercisable within 60 days of the filing
of this Form 10-K/A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
BSR Investments, Ltd. ("BSR"), an entity holding approximately 9.5% of the
outstanding shares of the Company's Common Stock, is under the control of Nicole
Souki, the mother of Charif Souki, Chairman of the Board of Directors. Charif
Souki has been engaged, from time to time, as a consultant to BSR. Charif Souki
disclaims beneficial ownership of all shares held by BSR.
BSR purchased $2,000,000 of the notes issued in connection with Cheniere's
$4,000,000 December 1997 Bridge Financing. BSR pledged a portion of its
investment in Cheniere Common Stock to fund its purchase of the notes. In
conjunction with the financing, BSR received warrants to purchase 566,667 shares
of the Company's Common Stock at an exercise price of $1.50 per share. In March
1999, BSR exchanged the $2,000,000 of Cheniere notes payable which it held for
2,777,778 shares of Cheniere Common Stock. In May 1999, BSR purchased an
additional $240,000 in Cheniere notes payable from another note holder. In July
1999, the Company repaid $120,000 to BSR at the time it repaid 50% of the
outstanding balances on all of its notes issued in the December 1997 Bridge
Financing. On September 30, 1999, BSR exchanged its remaining $120,000 note
payable and $1,000 in accrued interest for 110,000 units ($1.10 per unit), each
unit representing one share of Common Stock and one half warrant to purchase a
share of Common Stock at an exercise price of $1.50 per share on or before
September 30, 2002. In April 2000, Cheniere issued to BSR an additional 8,800
units pursuant to a price adjustment provision included in the September 1999
offering. During 1999, the Company paid BSR $22,640 in interest related to
notes held by BSR.
In conjunction with certain of the Company's private placements of equity,
placement fees have been paid to Investors Administration Services, Limited
("IAS"), a company in which the brother of Charif Souki, Cheniere's Chairman,
is a principal. Placement fees paid to IAS totaled $562,372 for the year ended
December 31, 1999. In addition, in connection with the sale of 10,483,031 units
(of Common Stock and warrants), Cheniere granted to IAS, or its assigns,
warrants to purchase 645,000 shares of Cheniere Common Stock at an exercise
price of $1.00 per share on or before December 30, 2002.
All such transactions were approved by the Board of Directors of the
Company, and the Company believes that each such transaction was on terms that
were comparable to, or more favorable to the Company than, those that might have
been obtained by the Company on an arm's length basis from unaffiliated parties.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CHENIERE ENERGY, INC.
By: /s/ DON A. TURKLESON
-----------------------------
Don A. Turkleson
Chief Financial Officer
Date: April 28, 2000
10
