I’m not sure when the cut in distribution is coming, but I agree that it is coming.
CQP currently has only $149 million in cash, restricted cash and non-current restricted cash (see latest 10-K). They also breakeven, or worse, on cash flow each quarter/year (see latest corporate presentation). Meanwhile, they owe $550 million in 2013.
The lenders may (or may not) agree to roll over the debt, but not without assurance that CQP will begin to build a cash reserve that can be used to pay back the loan. That means the distribution has to be cut. The lenders won’t rollover an interest only loan to a company that is paying unitholders a distribution but not able to pay the principle back to the lenders. I would expect that agreement would have to be sorted out before any serious financing discussions could start on the export project, so 2012 is a likely time for that to occur.