Business Context and Reporting Period
This Form 8-K, filed on September 11, 2015, reports events occurring on September 4, 2015, for Cheniere Energy, Inc. The filing details a material definitive agreement entered into by Sabine Pass Liquefaction, LLC ("SPL"), an indirect subsidiary of Cheniere. The agreement concerns the financing of the Sabine Pass LNG terminal project in Cameron Parish, Louisiana, which includes up to six liquefaction trains with a nominal capacity of approximately 4.5 million tonnes per annum each.
Key Financial Metrics and Facility Terms
SPL closed a $1.2 billion Amended and Restated Senior Working Capital Revolving Credit and Letter of Credit Reimbursement Agreement (the "Working Capital Facility").
- Total Facility Size: $1.2 billion.
- Working Capital Loans Sublimit: Up to $740 million (with a $200 million portion available for general corporate purposes).
- Letters of Credit: The entire $1.2 billion is available for issuance, including a $460 million sublimit for debt service reserve accounts and a $200 million sublimit for other working capital.
- Swing Line Loans: Up to $25 million (part of the Working Capital Sublimit).
- Incremental Capacity: Up to $760 million available upon request; an additional $390 million available upon completion of debt financing for the sixth liquefaction train.
- Interest Rates: LIBOR plus 1.75% or Base Rate plus 0.75%.
- Fees: Commitment fee of 0.70% on undrawn amounts; Letter of Credit fee of 1.75% on undrawn LCs; upfront and transaction fees totaling approximately $25.1 million.
- Maturity Date: December 31, 2020.
Material Changes and Collateral
The Working Capital Facility replaces or amends prior credit arrangements to support the development and operation of the SPL Project. The facility is secured on a pari passu basis by a first priority lien on substantially all assets of SPL and a pledge of all membership interests in SPL. The agreement incorporates covenants from a Common Terms Agreement, which will be replaced by the Working Capital Facility's covenants once other debt under the Common Terms Agreement is discharged. The new covenants are described as generally less restrictive than the previous Common Terms Agreement.
Outlook, Risks, and Conditions
Advances under the facility are subject to customary conditions precedent, including the absence of defaults, perfection of security interests, and evidence of adequate funding to complete the SPL Project. The facility includes customary events of default and mandatory prepayment provisions. SPL is required to reduce the aggregate outstanding principal of Working Capital Loans to zero for five consecutive business days at least once annually. The filing notes that lenders and their affiliates may provide financial services to SPL for which they receive customary fees.
Investor Verification Checklist
- Verify the full text of the Amended and Restated Senior Working Capital Revolving Credit Agreement (Exhibit 10.1) for specific covenant details.
- Confirm the status of the "Common Terms Agreement" and the timeline for its replacement by the Working Capital Facility covenants.
- Monitor the utilization of the $460 million Debt Service Reserve Account sublimit.
- Track progress on the sixth liquefaction train to determine eligibility for the additional $390 million incremental commitment.
- Review the $25.1 million in upfront and transaction fees paid in connection with the closing.