What is the purpose of the $1.5 billion commitment from EIG?

The $1.5 billion commitment from EIG is for the purchase of convertible notes. The proceeds are intended to partially fund the project costs of Cheniere's Corpus Christi Liquefaction Project, which includes building a natural gas liquefaction and export facility and associated pipeline infrastructure in Texas.

When is this funding expected to close, and what conditions must be met?

The closing of the convertible notes issuance is expected to occur in early 2015, immediately following the closing of the senior debt project financing for the Corpus Christi Liquefaction Project. Key conditions include the completion of EIG's due diligence, the entry into definitive documentation, and Cheniere's initial equity contribution to the project.

How will the 11% annual interest on the convertible notes be paid?

Interest will be paid quarterly in arrears. Until the commercial operation date (COD) of the third liquefaction train at Corpus Christi, interest will be paid entirely 'in-kind' (PIK), meaning it will be added to the principal amount of the notes. After the COD, interest will be paid in cash if the project generates sufficient cash to cover it; otherwise, it may continue to be paid in kind.

Can the holders of these notes convert them into Cheniere stock?

Yes, the notes would be convertible into Cheniere common stock prior to the ninth anniversary of the closing date. The issuer can convert them after the COD under specific pricing conditions (a 10% discount to VWAP or previous day's closing price). Holders can convert after six months from the COD at an average VWAP price. However, conversions are subject to several limitations, including minimum principal amounts, the percentage of outstanding shares that can be issued (19.9% total), and Cheniere's market capitalization.

LNG 8-K: Regulation FD — Nov 12, 2014

Summary

Cheniere Energy, Inc. (LNG) announced on November 11, 2014, a significant development for its Corpus Christi Liquefaction Project through a commitment letter with EIG Management Company, LLC. EIG, on behalf of its managed funds, has agreed to purchase $1.5 billion of convertible notes to be issued by a newly formed Cheniere subsidiary. These funds are earmarked to partially finance the construction of the Corpus Christi facility, a key component of Cheniere's expansion into natural gas liquefaction and export. The issuance of these convertible notes is contingent upon the successful closing of the senior debt project financing for the Corpus Christi Liquefaction Project, anticipated in early 2015. The notes will mature ten years after closing and carry an 11% annual interest rate, payable quarterly. Notably, interest will be paid-in-kind (PIK) until the commercial operation date of the third liquefaction train and potentially in PIK or cash thereafter, depending on cash availability from the project. This structure allows Cheniere to conserve cash in the early stages of project development while securing substantial funding.

Key Highlights

1Cheniere Energy secured a commitment from EIG Management Company for a $1.5 billion purchase of convertible notes to fund the Corpus Christi Liquefaction Project.
2The funding is contingent on the closing of senior debt project financing for Corpus Christi, expected in early 2015.
3The convertible notes will mature 10 years from closing and bear an 11% annual interest rate.
4Interest payments on the notes will be 'in-kind' (PIK) until the commercial operation date of the third liquefaction train, converting to cash-payable if sufficient cash is available thereafter.
5The notes are convertible into Cheniere common stock under specific conditions, including issuer or holder options, subject to pricing discounts, minimum principal amounts, and limitations on the percentage of shares issued (max 19.9% of outstanding stock).
6EIG will have the right to appoint a non-voting observer to the CCH board and a voting board member to Cheniere's board if certain ownership thresholds of Cheniere's common stock are met through conversions.
7The commitment letter expires on June 30, 2015, and is subject to due diligence and definitive documentation.

Cheniere Energy, Inc. 8-K Report, Regulation FD Disclosure (Nov 12, 2014)

Summary

Key Highlights

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