LMA MAKE-WHOLE AGREEMENT
Exhibit 4.34
SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).
This LMA Make-Whole Agreement (this “Agreement”), dated as of 22 December, 2021, is made by and among (1) Höegh LNG Ltd., a Bermuda exempted company (“HLNG”); and (2) Höegh LNG Partners Operating LLC, a ▇▇▇▇▇▇▇▇ Islands limited liability company (“HMOP”) with HLNG and HMOP being sometimes individually referred to as a “Party”, and collectively as the “Parties”.
RECITALS
HLNG and Höegh LNG Partners LP (“HMLP”) (amongst others) entered into an Option Agreement dated 1 October 2015 (“Option Agreement”) for the option of HMLP to require the re-chartering of the vessel named “Höegh ▇▇▇▇▇▇▇”, with IMO no. 9653678 (the “Vessel”) subject to certain conditions (including preservation of 90% of the hire rate at which the Vessel was originally chartered) (the “Option”). HLNG is content that HMLP subsequently exercised the Option.
Hoegh LNG Cyprus Limited (“Vessel Owner”) is the registered owner of the Vessel. Following HMLP’s exercise of the Option, and pursuant to a Lease and Maintenance Agreement dated April 30, 2020 (the “LMA”), Vessel Owner has chartered the Vessel to Höegh LNG Chartering LLC (“Charterer”) on the terms and subject to the conditions set out in the Original LMA.
Pursuant to a HLNG Performance Guarantee dated April 30, 2020 (the “Performance Guarantee”), HLNG has guaranteed the performance of Charterer under the LMA.
HMLP and HLNG have agreed that the Vessel will be deployed as an FSRU under charter to NFE International Shipping LLC (“NFE”) pursuant to the terms of a Charter Agreement dated 23 September 2021 and as amended by Amendment no. 1 dated 24 November 2021 (the “NFE Charter”) entered into initially between HMLP and NFE International Shipping LLC as charterer and to be novated to the Vessel Owner, and through an affiliate (“HLNG Jamaica Contractor”) provide operational services in respect of the Vessel to NFE South Holdings Limited (“NFE SH”) pursuant to an FSRU Operation Services Agreement dated 23 September 2021 (the “NFE OSA”) (both documents being, together, the “NFE Agreements”).
The Charterer has entered into a LNGC time charter party dated 24 November 2021 (“LNGC Interim Charter”) in respect of the Vessel pursuant to which NFE will charter the vessel in LNGC mode for the period from 26 November 2021 (the “LNGC Interim Charter Delivery Date”) until the Actual Arrival Date (as defined below) (the “LNGC Interim Period”).
Vessel Owner and Charterer have entered into a LMA suspension agreement dated on or about the date hereof (the “Suspension Agreement”) pursuant to which the respective rights and obligations of Vessel Owner and Charterer under the LMA shall be suspended and: (i) Vessel
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Owner shall have possession and use of the Vessel for purposes of chartering the Vessel to NFE pursuant to the terms of the NFE Agreements during the period commencing on the Actual Arrival Date and ending on the Redelivery Date (both as defined below) (the “Suspension Period”).
Consistent with the Option Agreement’s purpose of ensuring that, as between HMLP and HLNG, HMLP continues to benefit from the hire rate for the Vessel as set out in the LMA even if the Vessel is re-contracted, and noting further that Charterer does not have a guaranteed revenue stream for the entire remaining term of the LMA, HLNG has agreed to make make-whole payments to HMOP as set forth in Section 3.
agreement
NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:
DEFINITIONS
“Actual Arrival Date” shall have the meaning set forth in the NFE Charter.
“Agreement” shall have the meaning set forth in the introductory paragraph to this Agreement.
“Charterer” shall have the meaning set forth in the introductory paragraph of this Agreement.
“HLNG” shall have the meaning set forth in the introductory paragraph of this Agreement.
“HLNG Delivery Date” shall have the meaning set out in the Suspension Agreement.
“HLNG Jamaica Contractor” shall have the meaning set forth in the Recitals to this Agreement.
“HMLP” shall have the meaning set forth in the introductory paragraph of this Agreement.
“LMA” shall have the meaning set forth in the Recitals to this Agreement.
“LMA Hire” in respect of a calendar month shall mean the daily Hire (as that term is defined in Section 10.1(a) of the LMA) multiplied by the number of days in such calendar month.
“LNGC Interim Charter” has the meaning set forth in the Recitals to this Agreement.
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“LNGC Interim Charter Delivery Date” has the meanings set forth in the Recitals to this Agreement.
“LNGC Interim Period” has the meanings set forth in the Recitals to this Agreement.
“LNGC Interim Period Make Whole Payment” has the meaning set forth in Section 3.1
“Make-Whole Payment” has the meaning set forth in Section 3.2.
“NFE” shall have the meaning set forth in the Recitals to this Agreement.
“NFE Agreements” shall have the meaning set forth in the Recitals to this Agreement.
“NFE Charter” shall have the meaning set forth in the Recitals to this Agreement.
“NFE OSA” shall have the meaning set forth in the Recitals to this Agreement.
“NFE SH” shall have the meaning set forth in the Recitals to this Agreement
“Off-Hire” shall have the meaning set forth in the NFE Charter.
“Option” shall have the meaning set forth in the Recitals to this Agreement.
“Option Agreement” shall have the meaning set forth in the Recitals to this Agreement.
“Parties” shall have the meaning set forth in the introductory paragraph of this Agreement.
“Performance Guarantee” shall have the meaning set forth in the Recitals to this Agreement.
“Redelivery Date” the date on which the Vessel is redelivered to Charterer, which shall be the date on which the Vessel is redelivered to the Vessel Owner under the NFE Charter
“Required Performance Levels” shall have the meaning set forth in the NFE Charter.
“Suspension Agreement” shall have the meaning set forth in the Recitals to this Agreement.
“Suspension Period” shall have the meaning set forth in in the Recitals to this Agreement.
“Terminal” shall have the meaning set forth in the NFE Charter.
“Vessel” shall have the meaning set forth in the Recitals to this Agreement.
“Vessel Owner” shall have the meaning set forth in the Recitals to this Agreement.
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SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).
SUSPENSION OF LMA
Section 2.1 Suspension of LMA During the Suspension Period and while the Vessel is operating under the NFE Agreements, the Vessel Owner shall, and HMOP shall exercise reasonable endeavours to ensure that HLNG Jamaica Contractor shall seek to perform under the NFE Agreements to minimize the chance of early Redelivery of the Vessel under the NFE Agreements. HLNG shall have the right to request copies of monthly invoices issued by Vessel Owner to NFE under the NFE Charter and HLNG Jamaica Contractor to NFE SH under the NFE OSA to monitor the performance under the NFE Agreements as a condition for making payments as set forth in Section 3.2 and provided such invoices are provided, HLNG shall make the payments as set forth in Section 3.2.
MAKE-WHOLE, INDEMNITY and hold harmless OBLIGATIONS
In consideration of the capital costs incurred by HMOP in relation to the maintenance and refurbishment of the Vessel in preparation for the Vessel operating as an FSRU in Jamaica under the NFE Agreements and as the LNGC Interim Charter is entered into in connection with the NFE Charter, HLNG shall pay to HMOP the Upside Sharing Amount n of USD ***** for each day (to be multiplied by the number of days in the month for calendar month n, prorated for the calendar months in which, respectively, the LNGC Interim Charter Delivery Date and HLNG Delivery Date fall based on the number of days in the LNGC Interim Period that fall within such calendar month and the total days in such calendar month) of the LNGC Interim Period (the “LNGC Interim Period Make Whole Payment”). The LNGC Interim Make Whole Payment shall be made by HLNG to HMOP within ***** days from which NFE is required to make payment of hire under the LNGC Interim Charter. The LNGC Interim Make Whole Payment shall only be payable for the days the vessel is on-hire under the LNGC Interim Charter.
In consideration of the suspension of the obligations of Charterer under the LMA for the Suspension Period and to give effect to the parties’ intention in the Option Agreement that as between HMLP and HLNG, HMLP continues to benefit from the hire rate for the Vessel as set out in the LMA even if the Vessel is re-contracted, HLNG shall pay HMOP for each calendar month n in the Suspension Period the amount (the “Make-Whole Payment”)
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SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).
determined pursuant to the below formula, a worked example in relation to which is set out in Appendix 1 to this Agreement. Any Make-Whole Payment shall be made by HLNG to HMOP within ***** days from which NFE is required to make payment of hire under the NFE Charter.
MWP n | = | (LMA Hire n + LMA OPX Adj n + Upside Sharing Amount n) – (NFE Hire n + NFE SF n) |
where:
MWP n | = | the Make-Whole Payment due for calendar month n. |
LMA Hire n | = | the LMA Hire for calendar month n, prorated for the calendar months in with the HLNG Delivery Date and Redelivery Date fall based on the number of days in the Suspension Period that fall within such calendar month and the total days in such calendar month. For the purpose of calculating LMA Hire n, the Vessel shall be deemed to be on hire unless a period of Off-Hire for the period in question (as defined in Clause 14 of the NFE Charter) has been agreed under the NFE Charter. In the event there are any disputed Off-hire periods these will be deemed “on hire” periods for the purpose of the calculation and payment of the Make-Whole Payment, but if and when it is determined there was any Off-Hire, HMOP will return any overpayment to HLNG. |
LMA OPX Adj n | = | the amount, if any, determined pursuant to Section 10.1(c) of the LMA for calendar month n, prorated for the calendar months in with the HLNG Delivery Date and Redelivery Date fall based on the number of days in the Suspension Period that fall within such calendar month and the total days in such calendar month. For the purpose of determining whether any LMA OPX Adj n is due, it shall be assumed for the purpose of this Agreement that Section 10.1(c) of the LMA is part of the NFE Charter. |
Upside Sharing Amount n | | USD ***** per day multiplied by the number of days in the month for calendar month n, prorated for the calendar months in which, respectively, the HLNG Delivery Date and Redelivery Date fall based on the number of days in the Suspension Period that fall within such calendar month and the total days in such calendar month. The Upside Sharing |
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SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).
| | Amount n is payable every calendar month during the Suspension Period. |
NFE Hire n | = | the Monthly Hire that would be payable pursuant to Section 10.3 of the NFE Charter for calendar month n assuming that the Vessel was not Off-Hire at any time during such month and NFE was not entitled to any reduction of the Monthly Hire pursuant to Section 15 of the NFE Charter. Such Monthly Hire shall exclude the amount of any gross up payment in respect of Taxes payable pursuant to Clause 11.7(b) of the NFE Charter. |
NFE SF n | = | the Monthly Service Fee that would be payable pursuant to Section 8.1(a) of the NFE OSA for calendar month n assuming that the Vessel was not Off-Hire at any time during such month. Such Monthly Service Fee shall include the amount of any gross up payment in respect of Taxes pursuant to Clause 9.7(b) of the NFE OSA. |
In addition to the foregoing and without prejudice to the operation of the formula above or any other indemnity in this Agreement, HLNG shall indemnify and hold harmless HMOP in respect of any liability (including without limitation any taxes), loss, damage or expense of whatsoever nature that HMOP may sustain by reason of the Suspension of the LMA. Without prejudice to the generality of the foregoing, in the case of a period, if any, of Off-Hire under the NFE Charter that would not have been Off-Hire under the LMA then without prejudice to the operation of the formula above, HLNG shall also indemnify and hold harmless HMOP in this regard.
The Parties agree that certain project costs, that is costs to ready and relocate the Vessel for performance under the NFE Charter which will be recorded in the accounting records of the Vessel Owner, will be shared by HLNG and HMOP, as owner of the Vessel Owner, on a 50/50 basis up until a maximum amount of USD ***** such that HMOP’s contribution to such project costs shall never exceed an amount of USD ***** and HMOP shall only be obliged to contribute to such project costs as and when HLNG has paid an equivalent amount for such project costs to HMOP as a reimbursement of such costs. Any amount above USD ***** shall be borne solely by HLNG by paying the equivalent amount for such project costs as a reimbursement to HMOP. If HMOP pays any amount over USD
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SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).
***** or the contribution is not 50/50, any such amount shall be reimbursed by HLNG to HMOP.
Representations and Warranties of THE PARTIES
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Miscellaneous
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the particular provision or provisions held to be invalid and an equitable adjustment shall be made and necessary provision added so as to give effect, as nearly as possible, to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.
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SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).
APPENDIX 1
Worked example in relation to the formula set out at Section 3.2 of the Agreement above (all figures in United States Dollars)
Reference OSA rate (10c) | ***** | |
LMA rate | ***** | 90% EGAS rate |
10.1(c) LMA rate increase | ***** | (assuming Tax inc. opex rises from $***** per day to $***** per day) |
Upside sharing Amount | ***** | As agreed |
NFE Charter rate | -***** | (assuming US$ ***** per day discount for early delivery) |
NFE OSA rate | -***** | |
Make-whole | ***** |
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IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly executed as of the date first above written.
| HÖEGH LNG LTD. | ||
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| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇ | |
| Title: | Authorised signatory | |
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| HÖEGH LNG PARTNERS OPERATING LLC. | ||
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| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇ ▇▇▇▇ | |
| Title: | Authorised signatory | |