He has been hailed because the architect of the US liquefied pure fuel business, a person whose brash imaginative and prescient reconfigured international energy markets and as soon as made him the best-paid government in America.
Now Charif Souki says he’s battling Swiss financial institution UBS to maintain a roof over his head.
Souki based Cheniere Energy, the corporate that invented the enterprise of delivery chilled US shale gas abroad. The commerce has blossomed since Cheniere’s first cargo left port in 2016, turning the US right into a vital LNG provider to allies going through an energy crunch.
“Charif has been at the forefront, the pioneer, the person who in the face of scepticism delivered the proof of concept on a massive scale,” historian Daniel Yergin mentioned when Souki was honoured with the United States Energy Award in 2021.
But Souki, sacked from Cheniere after a bruising conflict with the investor Carl Icahn, has thus far failed to repeat his success with a second fuel export enterprise named Tellurian. Recent monetary struggles with UBS have solely difficult his plans.
This yr 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 looking for to liquidate extra of his belongings together with Aspen Valley Ranch, an 813-acre luxurious compound in Colorado that features a number of residences as well as to his personal. Last week two of his private funding autos filed for chapter safety so as to stave off an public sale.
Forced gross sales would “strip my family of its privately held business”, “cause my children . . . to become unemployed”, and “render me homeless”, Souki wrote in an affidavit submitted in a lawsuit looking for to cease them.
Tellurian plans to assemble Driftwood LNG on 1,200 acres alongside Louisiana’s Calcasieu river. If absolutely constructed it could change into one of many largest single export tasks within the US, costing $25bn.
The website has a contentious historical past. Souki started discussing the placement with former BG Group government 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 growth that he seen as dangerous and costly. When Souki was fired that December, Icahn issued a press release to “thank and congratulate the board for having the ‘guts’” to let him go.
The Icahn camp was displeased when, a number of months later, the previous Cheniere chief introduced he was going into enterprise with Houston to construct a liquefaction plant at the exact same website.
In duelling lawsuits, Cheniere demanded reimbursement 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, below the auspices of Tellurian, the scheme that had been thwarted at Cheniere.
The enterprise started auspiciously. French oil main Total made an funding in 2016, later promising to purchase 2.5mn tonnes a yr 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, trying 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 through a lending fund connected to its UBS O’Connor asset administration unit, secured in opposition to his Tellurian shares and different collateral. A yr 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 involved in the negotiations of the Tellurian loan”.
Soon after the loans had been funded, Tellurian hit the rocks. In 2020, with pandemic-hit economies shutting down and the worth of fuel in freefall, potential clients together with Indian importer Petronet walked away from their tentatively agreed offers. Total backed out the next yr. Collecting the cash it had superior in opposition to an LNG venture on the Calcasieu river was to show no simpler for UBS than it had for Cheniere.
Unlike Cheniere, which had fired after which sued Souki, UBS tried at first to courtroom him. Souki says that UBS O’Connor’s co-head of capital options, Baxter Wasson, requested him to “right the ship” at Tellurian, promising in return that the financial institution would take a “holistic approach” that will enable “time and flexibility” for Souki to repay his personal loans.
Tellurian mentioned in a securities submitting this yr that it had not been conscious of any such association, which “may have created a conflict of interest”. Souki, who took on further duties with a brand new title of government 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 yr UBS liquidated the Tellurian shares that Souki had pledged whereas they traded close to two-year lows; Souki says the gross sales had been poorly timed and drove the inventory even decrease.
“You can tell who is not very competent when things start not going well,” Souki mentioned in an interview. “They [UBS O’Connor] have taken a group of assets that had a lot of value. And by simply being bad about everything, they managed to destroy a lot of value.”
UBS countered in a courtroom submitting final month that it was not required to train “clairvoyance”. The financial institution declined additional remark.
Souki is now making an attempt 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 tens of millions of {dollars} are nonetheless excellent. A New York courtroom refused his request for an injunction that will have barred UBS from conducting a deliberate public sale of his belongings.
But after final week’s chapter safety submitting for 2 of his private funding autos, any choices on a sale may very well be put within the palms of a federal choose. “I don’t think there’s going to be an auction any more,” Souki mentioned.
Last yr Driftwood lost two extra high-profile consumers in Shell and Vitol and was compelled to abandon a $1bn bond sale. Tellurian’s shares have misplaced 80 per cent of their worth since 2019.
Two unbiased administrators stepped down earlier this yr, citing private causes and time commitments. Tellurian mentioned in a subsequent submitting that it believed neither had ever been “comfortable with the risk profile and strategic direction” of the corporate.
Yet Souki is optimistic that he can defy sceptics and procure the billions of {dollars} he wants to full the venture as international commerce in LNG reaches new data.
“Out of the $12bn or $13bn we’re going to need [for Driftwood’s first phase], we’re now sure that we have nine of them,” he advised the Financial Times. “We’re highly confident that there’s other mezzanine financiers who will come in. So $2bn from equity partners. It’s not going to be very hard.”
Some energy executives say Souki himself has change into the venture’s largest impediment, making Tellurian a potential goal for an activist hedge fund. “If you took him out, then I think those contracts get signed and people come back,” mentioned Ben Dell, managing companion of personal fairness group Kimmeridge.
Souki mentioned that if new shareholders did come on board, he was assured he may persuade them to again his technique.
As for shedding the ranch in a compelled sale, he provided a milder model of the fears expressed in courtroom papers. “I would be homeless in Aspen for a short period of time,” he mentioned. “But I do have other properties around the world.”
