Moodys DowngradeMoodys investor services recently downgraded Cheniers 90% owned subsidiary, Sabine Pass LNG, which contributes the majority of Chenieres cash flows. The reason for this downgrade is tied to Chenieres ability to meet its liquidity obligations.
one of the problems in this case is that Sabine is tied very closely to Cheniere contractually. If Cheniere goes into a desperate attempt to get cash, it might consider bankrupting Sabine in order to void any contractual obligations the company has. However, this will also destroy Chenieres main source of cash flow. Its somewhat of a double edged sword.
Also, the loan that credit Suisse has provided Cheniere with does not meet chenieres needs, but is just the only source of cash that the cmpany has access to. The 18 month term on the loan, combined with its interest payments of $19 million will stress the company even more than, which leads me to question managments ability to control debt and cash.
I would expect that this companies assets are either spun off, since some of the firms LNG ports are actually producing solid cash flows, although not in the context in which to help Cheniere. Another option is the bankruptcy of sabine, and liquidating the companies assets.