Summary
Cheniere Energy, Inc. (LNG) announced on November 9, 2006, that its indirect wholly-owned subsidiary, Sabine Pass LNG, L.P., successfully closed a private placement of over $2 billion in senior secured notes. This financing includes $2,032,000,000 aggregate principal amount of 7.25% Senior Secured Notes due 2013 and 7.50% Senior Secured Notes due 2016. The proceeds from this offering are earmarked for the construction and development of the Sabine Pass LNG receiving terminal project. This significant capital raise is a crucial step in advancing Cheniere's core infrastructure project, providing substantial funding for its construction and operational readiness. In conjunction with the debt issuance, Sabine Pass LNG has established a robust structure for fund management, including a construction account and a debt service reserve account, ensuring proper allocation for project costs and future debt obligations. Furthermore, the company entered into an Amended and Restated Terminal Use Agreement (TUA) with its subsidiary Cheniere Marketing, Inc., reserving a substantial portion of the terminal's annual LNG receipt and regasification capacity. The company also terminated two significant credit facilities, the Cheniere LNG Holdings Term Loan and the Sabine Pass LNG Credit Facility, using proceeds from the new notes to do so, thereby simplifying its debt structure and reducing financial complexities.
Key Highlights
- 1Sabine Pass LNG, an indirect wholly-owned subsidiary of Cheniere Energy, closed a private placement of $2.032 billion in senior secured notes (7.25% due 2013 and 7.50% due 2016).
- 2The proceeds are intended to fund the construction and development of the Sabine Pass LNG receiving terminal project.
- 3The notes are secured by a first-priority lien on substantially all of Sabine Pass LNG's equity interests and operating assets.
- 4The company deposited $335 million into a debt service reserve account and $887 million into a construction account to manage project funding.
- 5An Amended and Restated Terminal Use Agreement (TUA) was executed with Cheniere Marketing, reserving significant regasification capacity.
- 6Cheniere LNG Holdings Term Loan and Sabine Pass LNG Credit Facility were terminated and repaid using proceeds from the new notes.
- 7Interest rate swap agreements associated with the terminated credit facilities were also settled and terminated.