Summary
Cheniere Energy, Inc. (LNG) announced on November 11, 2014, the entry into a material definitive agreement through a Subscription Agreement with RRJ Capital II Ltd. This agreement involves the issuance and sale of $1.0 billion in aggregate principal amount of unsecured convertible PIK notes due 2021 to RRJ Capital II Ltd. The transaction is structured as a private placement under Section 4(a)(2) of the Securities Act and is expected to close on November 28, 2014. The notes carry a 4.875% annual interest rate, payable-in-kind (PIK), which will increase the principal amount. Importantly, one year after closing, these notes will become convertible into Cheniere's common stock at an initial conversion price of $93.64, representing a 30% premium over the stock's closing price on November 10, 2014. Cheniere is also committed to seeking SEC approval for an exchange offer to convert these privately placed notes into registered debt securities, aiming for completion within one year of closing. Alternatively, if registration is not possible, the company will pursue a shelf registration statement to allow for the resale of the notes and underlying common stock.
Key Highlights
- 1Cheniere Energy entered into a $1.0 billion note purchase agreement with RRJ Capital II Ltd.
- 2The agreement involves the sale of unsecured convertible PIK notes due 2021.
- 3The notes will bear interest at 4.875% per annum, payable-in-kind (PIK).
- 4Notes will be convertible into Cheniere common stock at an initial conversion price of $93.64, 130% of the November 10, 2014 closing price.
- 5The sale is structured as a private placement under Section 4(a)(2) of the Securities Act.
- 6Cheniere will seek SEC approval for an exchange offer to register the notes, or file a shelf registration statement for resale if exchange is not permitted.