Related Party Transactions

Finance Lease Obligations

On December 1, 2019, the Company refinanced its lease agreement with a subsidiary of The Modern Group, Ltd. (“The Modern Group”) for equipment purchases totaling approximately $3.2 million. Under the terms of the lease agreement, the Company’s monthly principal and interest payments are $232 thousand for the remaining 12 month term at an annual rate of 8.9%. An upfront fee payment of $131 thousand is due July 1, 2020 and the remaining outstanding lease obligation of approximately $646 thousand is due by January 25, 2021. The following individuals serve in various leadership capacities for The Modern Group: Casey Crenshaw (our Executive Chairman and Chairman of our Board) as President, Will Crenshaw (a member of our Board) as Chairman and Chief Executive Officer, and Ben Broussard (a member of our Board) as Director of Finance and as COO of M/G Finance Co., Ltd., a subsidiary of The Modern Group. Casey Crenshaw is the beneficial owner of 25% of the Modern Group and is deemed to jointly control The Modern Group with family members.

During 2018, Stabilis LLC entered into lease agreements with a subsidiary of The Modern Group to finance vehicles and machinery and equipment totaling approximately $1.5 million. Under the terms of the leases, the balance is due in equal monthly installments over 24 months at an annual interest rate of 10%.

The Company’s carrying value of finance lease obligations to related parties consisted of the following (in thousands):



	December 31,
	2019			2018
Finance lease obligations with subsidiary of The Modern Group, Ltd	$	4,088		$	7,246
Less: amounts due within one year	(3,440		)	(3,879		)
Total long term finance lease obligations to related parties	$	648		$	3,367

Secured Term Note Payable

The Company has a Secured Term Note Payable with Chart E&C in the principal amount of $2.1 million, at the rate of 3.0% plus the London interbank offered rate (4.7% at December 31, 2019), in connection with a Master Sales Agreement whereby Chart E&C agreed to sell the Company certain equipment for its liquefaction plant. See Note 10—Debt for further discussion of the Note Payable.

Secured Promissory Note

On August 16, 2019, the Company issued a Secured Promissory Note to M/G Finance Co., Ltd. in the principal amount of $5.0 million, at an interest rate per annum of 6% until December 10, 2020, and 12% thereafter. Casey Crenshaw, our Executive Chairman and Chairman of our Board, serves as the President of M/G Finance Co., Ltd. M/G Finance Co. Ltd. is a subsidiary of The Modern Group. See Note 10—Debt for further discussion of the Promissory Note.

Term Loan Facility

In connection with the acquisition of American Electric (see Note 2—Acquisition), the Company assumed a loan facility between M&I Brazil, a subsidiary, and an employee and director of the Company. The loan facility provides the Company with a $0.3 million loan facility of which $0.2 million is drawn and is outstanding as of December 31, 2019. All outstanding amounts, including accrued but unpaid interested, are due in June 2020. Under the loan agreement, the interest rate on the loan facility is 10.0%, per annum, payable each quarter. The loan facility is secured by the assets held by M&I Brazil.

Operating Leases

The Company subleases land in Fort Lupton, Colorado to a subsidiary of The Modern Group. During both the years ended December 31, 2019 and 2018, amounts billed to The Modern Group under the agreement totaled $10 thousand and $12 thousand, respectively.

The Company subleases space in Denver, Colorado to a subsidiary of The Modern Group. During the years ended December 31, 2019 and 2018, the Company billed $24 thousand and $55 thousand, respectively, to The Modern Group under the agreement.

Payroll and Benefits

The Company utilized payroll and benefit resources from The Modern Group. During the years ended December 31, 2019 and 2018, the Company incurred expenses of $4 thousand and $13 thousand for processing and administrative charges associated with payroll processing.

Other Purchases and Sales

The Company has issued a purchase order to Applied Cryo Technologies, Inc. (“ACT”), a company owned 51% by Crenshaw Family Holdings International, Inc., for equipment totaling $302 thousand. The Company expects to take delivery of equipment late in 2019. During the years ended December 31, 2019 and 2018, the Company also paid ACT $145 thousand and $63 thousand, respectively, for equipment repairs and services. The Company also sold $4 thousand of LNG to ACT during 2019. As of December 31, 2019 we had $4 thousand due from ACT included in accounts receivable on the consolidated balance sheets. There was no receivable due from ACT as of December 31, 2018. As of December 31, 2019 and 2018, respectively, we had $24 thousand and $5 thousand due to ACT included in accounts payable on the consolidated balance sheets.

The Company purchases supplies and services from a subsidiary of The Modern Group. During the years ended December 31, 2019 and 2018, purchases from The Modern Group totaled $175 thousand and $47 thousand, respectively. The Company also sold $52 thousand and $133 thousand of supplies and services to The Modern Group in 2019 and 2018, respectively. There was no receivable due from The Modern Group as of December 31, 2019. As of December 31, 2018, we had $4 thousand due from The Modern Group included in accounts receivable on the consolidated balance sheets. As of December 31, 2019 and 2018, respectively, we had $22 thousand and $29 thousand due to The Modern Group included in accounts payable on the consolidated balance sheets.

The Company purchases services from Chart E&C. During the years ended December 31, 2019 and 2018, purchases from Chart E&C totaled $80 thousand and $35 thousand. As of December 31, 2019 we had $8 thousand due to Chart E&C included in accounts payable on the consolidated balance sheets. There was no payable due to Chart E&C as of December 31, 2018.