What is the purpose of this $1.5 billion note issuance?

The $1.5 billion in convertible notes will be used to partially finance the construction and development costs of Cheniere's Corpus Christi Liquefaction Project, which is a significant natural gas liquefaction and export facility.

When will these notes be issued, and what are the key conditions for their issuance?

The notes will be issued on the closing date, which will occur immediately after the closing of the senior debt project financing for the Corpus Christi Liquefaction Project. Key conditions include Cheniere contributing sufficient cash equity and the successful closing of the senior debt financing by June 30, 2015.

What are the terms of the interest on these notes?

The notes accrue interest at 11% per annum. Prior to the substantial completion of the third liquefaction train (Commercial Operation Date), interest will be paid-in-kind (PIK). After the Commercial Operation Date, interest will be paid in cash, up to the amount of available cash or excess project cash flow; any shortfall can be paid PIK.

Under what conditions can these notes be converted into Cheniere common stock?

The notes can be converted into Cheniere common stock at the option of the Issuer (after the Commercial Operation Date, subject to no default) or the Note Purchasers (after six months from the Commercial Operation Date). Conversion is subject to several limitations, including minimum conversion amounts, caps on the total percentage of shares that can be issued (19.9%), a minimum Cheniere market capitalization of $13.7 billion prior to conversion, and restrictions related to EIG's ownership percentage.

LNG 8-K: Material Agreements, Financial Events & More

Summary

Cheniere Energy, Inc. (LNG) announced on January 16, 2015, through its wholly-owned subsidiary Cheniere CCH HoldCo II, LLC, the entry into a Note Purchase Agreement for $1.5 billion in convertible notes. These notes are intended to partially finance the Corpus Christi Liquefaction Project in Texas, a significant natural gas liquefaction and export facility. The funding is contingent upon the successful closing of the project's senior debt financing, with a June 30, 2015, termination date if closing does not occur. The notes carry an 11% annual interest rate, initially paid-in-kind until the substantial completion of the third liquefaction train. Post-completion, interest is payable in cash, subject to available cash and project cash flow. The notes mature ten years after closing and are convertible into Cheniere's common stock under specific conditions, including a cap on the total shares issued and Cheniere's market capitalization requirements. This financing represents a crucial step in advancing Cheniere's large-scale LNG export infrastructure.

Key Highlights

1Cheniere Energy, Inc. subsidiary entered into a $1.5 billion Note Purchase Agreement for convertible notes.
2Proceeds will partially fund the Corpus Christi Liquefaction Project, a major LNG export facility.
3Financing is contingent on the closing of senior debt project financing for the Corpus Christi Liquefaction Project.
4The notes accrue 11% annual interest, initially paid-in-kind, with cash payments required post-commercial operation of the third liquefaction train.
5Notes mature 10 years after the closing date.
6The notes are convertible into Cheniere Common Stock under specific conditions, including market capitalization thresholds and limitations on total share issuance (capped at 19.9% of outstanding shares as of January 12, 2015).
7EIG Management Company, LLC, a note purchaser, has rights to appoint an observer to CCH's board and potentially a director to Cheniere's board under certain share ownership conditions after conversion.

Cheniere Energy, Inc. 8-K Report, Material Agreement (Jan 16, 2015)

Summary

Key Highlights

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