What is the significance of the Cameron LNG joint venture becoming effective?

The effectiveness of the Cameron LNG joint venture on October 1, 2014, signifies the formal commencement of Sempra Energy's investment in the development, construction, and operation of the natural gas liquefaction export facility. It also marks the point at which Sempra Energy began accounting for its 50.2% stake using the equity method and when its guarantee of project financing became active.

What is Sempra Energy's financial exposure related to the Cameron LNG project?

Sempra Energy has provided a completion guarantee for 50.2% of the Cameron LNG project's senior debt obligations. Based on the total financing of $7.4 billion, Sempra Energy's maximum guaranteed amount is approximately $3.7 billion. This guarantee is contingent and is expected to terminate upon the project's financial completion.

What are the key financial terms of the Cameron LNG project financing?

The project secured up to $7.4 billion in senior secured loans with a 16-year term maturing on July 15, 2030. Interest rates are variable, calculated as a spread over LIBOR (1.59% before financial completion, 1.78% after). The loans are financed through facilities with the Japan Bank for International Cooperation (JBIC) and 15 commercial banks, with insurance from NEXI.

What happens if the Cameron LNG project does not achieve financial completion by the deadline?

If the project fails to achieve financial completion by September 30, 2021 (with possible extensions), it would constitute an event of default under the loan agreements. This could lead to acceleration of the debt and a demand for Sempra Energy to purchase its 50.2% share of the outstanding senior debt obligations, potentially impacting its financial commitment.

SRE/SREA 8-K: Financial Events

Summary

Sempra Energy (SRE) filed an 8-K on October 2, 2014, to report on the effectiveness of the Cameron LNG joint venture and its associated financing. This filing marks a significant milestone as Sempra Energy and its project partners finalized their investment decision and commenced construction of the natural gas liquefaction export facility. The project secured substantial senior secured financing, totaling up to $7.4 billion, which includes loans from the Japan Bank for International Cooperation (JBIC) and commercial banks, partially insured by Nippon Export and Investment Insurance (NEXI). Following the satisfaction of regulatory and financing conditions, the Cameron LNG joint venture became effective on October 1, 2014. Sempra Energy now holds a 50.2% indirect equity interest, and the company will account for this investment using the equity method. A critical aspect for investors is Sempra Energy's guarantee of 50.2% of the Cameron LNG senior debt obligations, up to approximately $3.7 billion, which becomes effective with the joint venture. This guarantee will terminate upon the project's financial completion, anticipated in the second half of 2019.

Key Highlights

1Cameron LNG joint venture became effective on October 1, 2014, with Sempra Energy holding a 50.2% equity interest.
2The project secured up to $7.4 billion in senior secured financing from JBIC and commercial banks.
3Sempra Energy has guaranteed 50.2% of Cameron LNG's senior debt obligations, representing up to approximately $3.7 billion.
4The financing has a term of 16 years, with a maturity date of July 15, 2030.
5Interest rates are variable, set at 1.59% over LIBOR before financial completion and 1.78% over LIBOR after.
6The project's financial completion is anticipated in the second half of 2019, at which point Sempra Energy's guarantee will terminate.
7Failure to achieve project financial completion by September 30, 2021 (with potential extensions) could trigger an event of default and a demand on Sempra Energy's guarantee.

SEMPRA 8-K Report, Financial Obligation (Oct 2, 2014)

Summary

Key Highlights

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