He was hailed for his bold vision that reshaped the global energy market and made him one of the highest-paid executives in America.
Charif Souki claims he has been fighting the Swiss bank UBS for a roof to cover his head.
Souki founded Cheniere Energy. The company invented the concept of shipping chilled US shales gas abroad. Since Cheniere’s initial cargo left port in 2016, the trade has grown, making the US a vital LNG supplier for allies who are facing a shortage of energy.
When Souki received the United States Energy Award in 2021, historian Daniel Yergin stated that Charif was “at the forefront”, the pioneer and the person who, in spite of scepticism, delivered proof of concept at a large scale.
Souki has failed to replicate his success in a second venture for gas exports named Tellurian. His plans have been complicated by recent financial difficulties with UBS.
In a dispute regarding a loan that was not paid, his bankers took away a large portion of his Tellurian shares. The Tango, his prized sailboat has been confiscated. UBS wants to liquidate his other assets, including Aspen Valley Ranch in Colorado, a 813-acre compound that has several residences as well as his own. Two of his personal investment vehicles sought bankruptcy protection last week to avoid an auction.
Forced sales “would strip my family of their privately owned business”, “cause me to lose my children”. . . Souki, in an affidavit filed in a lawsuit to stop them, wrote that they would “make me unemployed” and “leave me homeless”.
Tellurian plans Driftwood LNG construction on 1,200 acres of land along Louisiana’s Calcasieu River. It would be one of the biggest export projects in US history, with a cost of $25bn. The site’s history is tumultuous. Souki first discussed the location in 2014 with Martin Houston, a former BG Group executive who was then leading Cheniere. Cheniere gave Houston’s firm $46mn in advance to start buying land.
Icahn purchased a stake in Cheniere and immediately stopped a project that he considered to be risky and costly. Icahn released a statement in December 2015 to thank and congratulate Cheniere’s board for their “guts” to fire Souki.
Icahn’s camp was disappointed when, just a few short months later, the former Cheniere CEO announced that he would be doing business with Houston for the construction of a liquefaction facility at the exact same location.
Cheniere sued Houston for $46mn in damages, and Houston sued Cheniere to recover the money Houston spent on the purchase of the land. The lawsuit was settled by 2020. This allowed the two to continue the Cheniere scheme under the auspices Tellurian. The venture began auspiciously. French oil major Total made an investment in 2016, later promising to buy 2.5mn tonnes a year from Driftwood. By 2017 Tellurian, with few assets besides the still-unconstructed terminal, commanded a stock market valuation of nearly $3bn.
Around that time, Souki was looking for cash and called an old friend who had just joined the wealth management division of UBS. In 2018, the bank had loaned Souki $90mn via a lending unit attached to its UBS O’Connor Asset Management unit. The money was secured by his Tellurian share and other collateral. The UBS fund then followed up a year later with a loan of $60mn to Tellurian where Souki served as chairman. In an affidavit, Souki stated that he “made an introduction” but was not involved in the negotiation of the Tellurian Loan.
Tellurian’s financial situation began to deteriorate soon after the loan was funded. As pandemics hit economies and gas prices plummeted, customers such as Indian importer Petronet, walked away. Total pulled out of the deal in 2010. UBS found it difficult to collect the money it advanced for an LNG project along the Calcasieu River.
UBS, unlike Cheniere which fired Souki and then sued him, tried to court Souki at first. Souki claims that UBS O’Connor’s Baxter Wasson co-head for capital solutions asked him to “right” the ship at Tellurian. In return, the bank promised to take a holistic approach that would give Souki “time and flexibility” to repay his loans.
Tellurian stated in a filing of securities this year that they were not aware of such an arrangement which “may or may not have created a potential conflict of interest”. Souki declined to comment about the conflict of interest that may have arisen from this arrangement.
UBS and Tellurian were at odds after UBS repaid the loan to Souki in 2021. Souki claims he sold parts of Aspen Valley Ranch, and that he attempted to sell other areas but was prevented by UBS. UBS denies this claim.
UBS informed Souki two days before Christmas Eve that it would be seizing the Tango. The Tango has since been sold, a process Souki says was also botched. UBS sold the Tellurian stock that Souki pledged earlier this year, when the shares were trading at a two-year low. Souki claims the sales of the stock were badly timed.
In an interview, Souki stated that “you can tell who’s not very competent” when things don’t go well. “They [UBS O’Connor] took a group assets that had great value. They destroyed a lot by being unreliable in everything.
UBS countered last month in a filing to a court that it wasn’t required to use “clairvoyance”. The bank declined to comment further. Souki now tries to reassert his control over the sale his ranch and real estate brokerage business in Aspen, Colorado. These are the last remaining collaterals for loans that UBS claims still owe tens or even hundreds of millions of dollars. New York’s court denied his request for a preliminary injunction, which would have prevented UBS from auctioning his assets.
After filing for bankruptcy protection last week, any decision on a sale would be in the hands a federal court judge. Souki stated, “I do not think that there will be any auctions anymore.”
Driftwood was forced to abandon its $1bn bond deal last year after losing Shell and Vitol. Tellurian shares have lost over 80 percent of their value in the last year.
Two independent directors left their positions earlier this year citing time commitments and personal reasons. Tellurian stated in a later filing that they believed both directors had never been “comfortable” with the risk profiles and strategic directions of the company.
Souki remains confident that he will be able to defy the skeptics and secure the billions he needs in order to complete the project, as the global trade of LNG is reaching new records.
We’re confident that nine financiers will come in to provide the $12bn to $13bn. “We are confident that other mezzanine investors will step in.” So, $2bn in equity from partners. “It’s going to be easy.”
Several energy executives claim that Souki has been the biggest obstacle to the project, and Tellurian could be a target for a hedge fund activist. Ben Dell, managing director of Kimmeridge, a private equity firm, said that if Souki was removed, he believes contracts would be signed and investors would return.
Souki was confident that, should new investors join the company, he would be able to convince them of his strategy.
He expressed a softer version of his fears in court documents about losing the ranch if it was forced to be sold. He said that he would be temporarily homeless in Aspen. “But I have other properties all over the world.”