Blackstone to Divest Cheniere Partners' Units to Brookfield

Some of the major Cheniere Energy Partners, L.P.’s CQP units are expected to be acquired by a leading global alternative asset manager, Brookfield Asset Management Inc. BAM, from The Blackstone Group Inc. BX. Per Bloomberg, the deal prices each Cheniere Partners’ units at $34.25, which leads to a total transaction value of $7 billion. Blackstone will likely jettison around 40% of its stake in the partnership.

Bloomberg expects Blackstone to gain $5 billion from the stake divestment. It invested $1.5 billion in Cheniere Partners in 2012. Blackstone Infrastructure Partners, an affiliate of Blackstone Group, will team up with Brookfield Infrastructure to buy Cheniere Partners’ units. If any of the two entities of the team fail to complete their portion of the deal, the other one will be able to buy the entire interest that is being divested by Blackstone Group.

The timing of the deal is crucial. Cheniere Partners, which exports liquefied natural gas (“LNG”), witnessed a sharp fall in demand and canceled cargoes for a brief period of time due to the coronavirus pandemic. However, as coronavirus-induced lockdowns are being eased gradually, demand for LNG is recovering fast. Even the partnership reiterated its full-year 2020 adjusted EBITDA guidance at $3.8-$4.1 billion. Also, it reaffirmed distributable cash flow for the year at $1-$1.3 billion.

Headquartered in Houston, TX, Cheniere Partners is the owner and operator of regasification units at the Sabine Pass LNG terminal, located in Cameron Parish, LA. The partnership was formed in 2006 by Cheniere Energy, Inc. LNG. The Train 6 at the Sabine Pass LNG terminal project was 63.9% complete at second quarter-end. Full work on the train is expected to be completed by second-half 2022.

Price Performance & Zacks Rank

Cheniere Partners, currently carrying a Zacks Rank #3 (Hold), has gained 16.6% in the past three months compared with 1.5% rise of the industry it belongs to. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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