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He has been hailed because the architect of the US liquefied pure gasoline business, a person whose brash imaginative and prescient reconfigured international power markets and as soon as made him the best-paid govt in America.
Now Charif Souki says he’s battling Swiss financial institution UBS to maintain a roof over his head.
Souki based Cheniere Power, the corporate that invented the enterprise of transport chilled US shale gas abroad. The commerce has blossomed since Cheniere’s first cargo left port in 2016, turning the US right into a important LNG provider to allies dealing with an power crunch.
“Charif has been on the forefront, the pioneer, the one that within the face of scepticism delivered the proof of idea on a large scale,” historian Daniel Yergin mentioned when Souki was honoured with the US Power Award in 2021.
However Souki, sacked from Cheniere after a bruising conflict with the investor Carl Icahn, has to date didn’t repeat his success with a second gasoline export enterprise named Tellurian. Current monetary struggles with UBS have solely difficult his plans.
This 12 months his bankers stripped him of a lot of his Tellurian shareholdings in a dispute over a defaulted mortgage. His prized sailboat, the Tango, has been seized. UBS is in search of to liquidate extra of his belongings together with Aspen Valley Ranch, an 813-acre luxurious compound in Colorado that features a number of residences along with his personal. Final week two of his private funding automobiles filed for chapter safety with a purpose to stave off an public sale.
Compelled gross sales would “strip my household of its privately held enterprise”, “trigger my kids . . . to grow to be unemployed”, and “render me homeless”, Souki wrote in an affidavit submitted in a lawsuit in search of to cease them.
Tellurian plans to assemble Driftwood LNG on 1,200 acres alongside Louisiana’s Calcasieu river. If absolutely constructed it will grow to be one of many largest single export tasks within the US, costing $25bn.
The positioning has a contentious historical past. Souki started discussing the situation with former BG Group govt Martin Houston in 2014, when he nonetheless led Cheniere. Cheniere superior Houston’s firm $46mn to start shopping for land.
Icahn purchased a stake in Cheniere in 2015 and promptly put a cease to a improvement that he considered as dangerous and costly. When Souki was fired that December, Icahn issued an announcement to “thank and congratulate the board for having the ‘guts’” to let him go.
The Icahn camp was displeased when, just a few months later, the previous Cheniere chief introduced he was going into enterprise with Houston to construct a liquefaction plant at the exact same web site.
In duelling lawsuits, Cheniere demanded compensation of the $46mn that Houston had used to purchase the land, whereas Houston’s firm sought damages from Cheniere for strolling away from their three way partnership. The litigation was settled in 2020, leaving the pair free to pursue, beneath the auspices of Tellurian, the scheme that had been thwarted at Cheniere.
The enterprise started auspiciously. French oil main Whole made an funding in 2016, later promising to purchase 2.5mn tonnes a 12 months from Driftwood. By 2017 Tellurian, with few belongings apart from the still-unconstructed terminal, commanded a inventory market valuation of practically $3bn.
At round that point Souki, seeking to increase money, says he known as a childhood pal and longtime monetary adviser who had not too long ago arrived on the wealth administration arm of UBS. By 2018, the financial institution had lent $90mn to Souki by way of a lending fund connected to its UBS O’Connor asset administration unit, secured in opposition to his Tellurian shares and different collateral. A 12 months later, the UBS fund adopted up with a $60mn mortgage to Tellurian, the place Souki was chair. Souki has mentioned in an affidavit that he made an introduction however “was not concerned within the negotiations of the Tellurian mortgage”.
Quickly after the loans have been funded, Tellurian hit the rocks. In 2020, with pandemic-hit economies shutting down and the value of gasoline in freefall, potential clients together with Indian importer Petronet walked away from their tentatively agreed offers. Whole backed out the next 12 months. Gathering the cash it had superior in opposition to an LNG mission on the Calcasieu river was to show no simpler for UBS than it had for Cheniere.
Not like Cheniere, which had fired after which sued Souki, UBS tried at first to court docket him. Souki says that UBS O’Connor’s co-head of capital options, Baxter Wasson, requested him to “proper the ship” at Tellurian, promising in return that the financial institution would take a “holistic method” that may enable “time and adaptability” for Souki to repay his personal loans.
Tellurian mentioned in a securities submitting this 12 months that it had not been conscious of any such association, which “might have created a battle of curiosity”. Souki, who took on additional duties with a brand new title of govt chair, declined to touch upon whether or not there had been any battle.
After Tellurian repaid its loans in 2021, UBS turned its consideration to the cash it had lent Souki, placing the 2 sides at loggerheads. Souki bought some elements of Aspen Valley Ranch and says he tried to promote others however was blocked by the financial institution, a declare UBS denies.
Two days earlier than final Christmas Eve, UBS notified Souki it was seizing the Tango, which has since been bought in a course of that Souki claims was additionally botched. Earlier this 12 months UBS liquidated the Tellurian shares that Souki had pledged whereas they traded close to two-year lows; Souki says the gross sales have been poorly timed and drove the inventory even decrease.
“You’ll be able to inform who just isn’t very competent when issues begin not going nicely,” Souki mentioned in an interview. “They [UBS O’Connor] have taken a gaggle of belongings that had quite a lot of worth. And by merely being dangerous about the whole lot, they managed to destroy quite a lot of worth.”
UBS countered in a court docket submitting final month that it was not required to train “clairvoyance”. The financial institution declined additional remark.
Souki is now attempting to reassert management over the sale of his ranch and his actual property brokerage within the Colorado ski city of Aspen, the remaining collateral for loans on which UBS says tens of thousands and thousands of {dollars} are nonetheless excellent. A New York court docket refused his request for an injunction that may have barred UBS from conducting a deliberate public sale of his belongings.
However after final week’s chapter safety submitting for 2 of his private funding automobiles, any choices on a sale could possibly be put within the arms of a federal decide. “I don’t suppose there’s going to be an public sale any extra,” Souki mentioned.
Final 12 months Driftwood lost two extra high-profile patrons in Shell and Vitol and was pressured to desert a $1bn bond sale. Tellurian’s shares have misplaced 80 per cent of their worth since 2019.
Two impartial administrators stepped down earlier this 12 months, citing private causes and time commitments. Tellurian mentioned in a subsequent submitting that it believed neither had ever been “snug with the danger profile and strategic path” of the corporate.
But Souki is optimistic that he can defy sceptics and acquire the billions of {dollars} he wants to finish the mission as international commerce in LNG reaches new information.
“Out of the $12bn or $13bn we’re going to wish [for Driftwood’s first phase], we’re now positive that we’ve 9 of them,” he instructed the Monetary Occasions. “We’re extremely assured that there’s different mezzanine financiers who will are available. So $2bn from fairness companions. It’s not going to be very laborious.”
Some power executives say Souki himself has grow to be the mission’s greatest impediment, making Tellurian a doable goal for an activist hedge fund. “Should you took him out, then I feel these contracts get signed and other people come again,” mentioned Ben Dell, managing companion of personal fairness group Kimmeridge.
Souki mentioned that if new shareholders did come on board, he was assured he might persuade them to again his technique.
As for shedding the ranch in a pressured sale, he supplied a milder model of the fears expressed in court docket papers. “I might be homeless in Aspen for a brief time frame,” he mentioned. “However I do produce other properties all over the world.”
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