Australia: LNG Limited Signs Share Placement Agreement with HQCEC

The Directors of Liquefied Natural Gas Limited announced that a definitive share Placement Agreement and Process Deed have been executed with China Huanqiu Contracting & Engineering Corporation (HQCEC).

HQCEC is a wholly owned subsidiary of China National Petroleum Corporation (CNPC), which is China’s largest producer and supplier of crude oil and natural gas.

The Placement Agreement and Process Deed are consistent with the terms of the previously announced Term Sheet, dated 27 January 2011, between HQCEC and LNG LTD.

The Placement Agreement includes the following key provisions:

• HQCEC to subscribe for 53,250,000 shares (~19.9%) in LNG LTD (Placement) at a price which is the lesser of:

– A$0.48 cents (~A$25.6 million), or

– 80% of the volume weighted average market price (as such term is defined in the ASX Listing Rules) of ordinary shares in LNG LTD on the ASX, calculated over the five days in which sales of ordinary shares in LNG LTD are recorded on the ASX prior to the Placement date.

• Application of the Placement proceeds for the development of LNG LTD’s wholly owned 3 million tonne per annum Fisherman’s Landing LNG Project, at Fisherman’s Landing, Port of Gladstone, Queensland, Australia.

• Subject to the provision of a waiver by the ASX, under Listing Rule 6.18, HQCEC will have the right to subscribe for additional shares in LNG LTD from time to time, at market share prices, to preserve its % shareholding in LNG LTD if any existing securities which are convertible into LNG LTD shares are converted within 5 years of the Placement date.

• Appointment of HQCEC, or an affiliate of HQCEC or CNPC, as the sole Engineering, Procurement, Construction and Commissioning (EPC) contractor for the Fisherman’s Landing LNG Project, conditional on HQCEC providing a competitive EPC proposal based on LNG LTD’s wholly owned OSMR® LNG process technology.

• Subject to agreement of final terms, HQCEC, CNPC and their affiliates will have the right to use LNG LTD’s OSMR® LNG process technology worldwide on preferential terms.

• Consideration by CNPC, or an affiliate of CNPC, as to their potential involvement in the Fisherman’s Landing LNG Project, including the purchase of all or part of the proposed initial 3 million tonne per annum LNG production capacity of the project’s first two LNG trains on preferential terms and provision, or arranging, of debt financing for the development of the project.

• LNG LTD’s ongoing pursuit of gas supply for the Fisherman’s Landing LNG Project’s first two LNG trains.

The Process Deed includes the following key provisions:

• Subject to shareholder approval, the appointment of Madam Wang Xinge as an Executive Director to the Board of LNG LTD and Co Chief Executive Officer of LNG LTD, to work with the existing Managing Director/Chief Executive Officer, Maurice Brand. Madam Wang is currently a Senior Vice President of HQCEC, responsible for the international global operations of HQCEC.

• Subject to shareholder approval, the appointment of Mr Zhang Gaowu as a Non-Executive Director to the Board of LNG LTD. Mr Zhang is the Deputy Director of Finance & Asset Management Division of HQCEC.

• Requirement for LNG LTD to consult with HQCEC and, in prescribed cases, obtain HQCEC’s prior consent to material transactions proposed by LNG LTD.

Completion of the Placement is conditional on certain matters including:

• HQCEC obtaining final approval from CNPC;

• HQCEC receiving approval from the Ministry of Commerce and the National Development and Reform Commission of the People’s Republic of China;

• LNG LTD obtaining the approval of its shareholders, at a General Meeting of shareholders scheduled for 7 June 2011; and

• LNG LTD’s satisfaction of several conditions in relation to its Fisherman’s Landing LNG Project.

HQCEC has obtained Australian Foreign Investment Review Board approval for the Placement and, as previously announced, LNG LTD has obtained a Petroleum Facility Licence for its Fisherman’s Landing LNG Project, both of which were conditions precedent to the Placement in the Term Sheet between HQCEC and LNG LTD.

The Placement remains on schedule for completion in the second quarter of 2011.

LNG LTD’s Chairman, Richard Beresford said “the LNG LTD Board looks forward to welcoming Madam Wang and Mr Zhang to the Board on completion of the Placement and working with them and HQCEC to deliver on LNG LTD’s business objectives”.

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Source: LNG Limited, May 4, 2011;