What is the primary purpose of this financing arrangement?

The primary purpose of this financing is to raise up to $1.5 billion through the issuance of convertible notes to partially fund the construction and development costs of Cheniere's Corpus Christi Liquefaction Project in Texas.

What are the key terms of the convertible notes?

The notes mature in ten years, accrue 11% annual interest (initially paid-in-kind), and can be converted into Cheniere's common stock under specific conditions related to conversion price, minimum amounts, and market capitalization thresholds. The agreement allows for two funding stages totaling $1.5 billion.

What are the conditions for the funding to occur?

Funding is contingent upon several conditions, including the successful closing of the senior debt project financing for the Corpus Christi Liquefaction Project, Cheniere contributing sufficient cash equity, and other customary closing conditions. The second phase funding has its own set of conditions related to the third liquefaction train.

What is the potential impact on Cheniere's common stock if the notes are converted?

If converted, up to 47,108,466 shares of Cheniere Common Stock could be issued, representing approximately 19.9% of the outstanding shares as of January 12, 2015. Conversions are subject to limitations to manage dilution and market capitalization. EIG may also gain board representation rights if their ownership exceeds certain thresholds post-conversion.

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

Summary

Cheniere Energy, Inc. (LNG) announced on March 1, 2015, through its wholly owned subsidiary Cheniere CCH HoldCo II, LLC, an Amended and Restated Note Purchase Agreement. This agreement allows for the issuance of up to $1.5 billion in convertible notes to partially fund the Corpus Christi Liquefaction Project. The funding is structured in two stages: an initial $1.0 billion issuance at closing and a potential $500 million second phase issuance. The notes bear an 11% annual interest rate, payable in kind until the Commercial Operation Date and thereafter in cash or kind, subject to cash flow limitations. These convertible notes have a ten-year maturity and can be converted into Cheniere's common stock under specific conditions and limitations, including aggregate principal amount, market capitalization thresholds, and ownership limits for EIG Management Company, LLC.

Key Highlights

1Cheniere Energy, Inc. subsidiary entered into an Amended and Restated Note Purchase Agreement for up to $1.5 billion in convertible notes.
2Proceeds from the notes will be used to partially fund the Corpus Christi Liquefaction Project.
3The financing is structured in two tranches: $1.0 billion at closing and $500 million for a second phase.
4The convertible notes carry an 11% annual interest rate, with PIK interest prior to the Commercial Operation Date.
5Notes mature ten years from the Closing Date and are convertible into Cheniere Common Stock under defined conditions.
6Funding is contingent on the closing of senior debt project financing for the Corpus Christi Liquefaction Project.
7EIG Management Company, LLC (EIG) has observer rights on CCH's board and potential board appointment rights for Cheniere based on its stake post-conversion.

Cheniere Energy, Inc. 8-K Report, Material Agreement (Mar 2, 2015)

Summary

Key Highlights

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