8-KMaterial AgreementsFinancial EventsExhibits & Filings

Cheniere Energy, Inc. 8-K Report, Material Agreement (Mar 2, 2016)

Filed March 2, 2016For Securities:LNG

Summary

Cheniere Energy, Inc. (LNG) has disclosed the entry into a significant new credit facility through its subsidiary, Cheniere Energy Partners, L.P. (the Partnership). The "CQP Credit Facilities" provide up to $2.8 billion in aggregate debt financing, comprising a $450 million term loan for Cheniere Creole Trail Pipeline, L.P. (CCTP) and a $2.1 billion term loan for Sabine Pass LNG, L.P. (SPLNG), alongside a debt service reserve facility and a revolving credit facility. The primary purpose of these new facilities is to refinance existing debt, specifically the $400 million senior secured term loan at CCTP and approximately $2.12 billion in senior secured notes at SPLNG. This refinancing is a key strategic move aimed at optimizing the company's capital structure and managing its debt obligations. The CQP Credit Facilities are secured by substantially all assets of the Partnership and its Subsidiary Guarantors, with a defined waterfall for cash distributions and debt repayment priorities.

Key Highlights

  • 1Entry into $2.8 billion "CQP Credit Facilities" by subsidiary Cheniere Energy Partners, L.P.
  • 2Refinancing of approximately $400 million CCTP term loan and $2.12 billion SPLNG senior secured notes.
  • 3The facility includes a $450 million CCTP term loan tranche and a $2.1 billion SPLNG term loan tranche.
  • 4Includes a $125 million debt service reserve facility and a $115 million revolving credit facility.
  • 5The credit facilities are secured by substantially all assets of the Partnership and Subsidiary Guarantors.
  • 6Mandatory prepayments and repayment in quarterly installments commencing February 25, 2019, with a maturity date of February 25, 2020.
  • 7Customary affirmative and negative covenants, including restrictions on additional indebtedness, asset sales, and affiliate transactions, with specific debt service coverage ratio requirements.

Frequently Asked Questions

The primary purpose of the CQP Credit Facilities is to refinance existing debt obligations of Cheniere's subsidiaries, CCTP and SPLNG. This includes prepaying the $400 million CCTP senior secured term loan and redeeming or repaying approximately $2.12 billion in SPLNG senior secured notes.

The total aggregate amount of debt that can be incurred under the CQP Credit Facilities is up to $2.8 billion. This is comprised of a $450 million CCTP tranche term loan, a $2.1 billion SPLNG tranche term loan, a $125 million debt service reserve credit facility, and a $115 million revolving credit facility.

The debt is structured into term loans for CCTP and SPLNG, a debt service reserve facility, and a revolving credit facility. The CQP Credit Facilities are unconditionally guaranteed by certain subsidiaries of the Partnership and are secured by a first priority lien on substantially all of the existing and future tangible and intangible assets and rights of the Partnership and the Subsidiary Guarantors.

The facilities include customary covenants restricting the Partnership's ability to incur additional indebtedness or liens, engage in asset sales, or enter into affiliate transactions. Key financial covenants require the Partnership to maintain interest rate protection, a minimum debt service coverage ratio of 1.15x from March 31, 2019, and a projected debt service coverage ratio of 1.55x to incur additional indebtedness for refinancing purposes. Restricted payments are limited to quarterly amounts based on Available Cash and meeting specific coverage ratio tests.