| Debt |
DEBT
As of June 30, 2018 and December 31, 2017, our debt consisted of the following (in millions):
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June 30, |
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December 31, |
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2018 |
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2017 |
Long-term debt: |
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SPL |
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5.625% Senior Secured Notes due 2021 (“2021 SPL Senior Notes”) |
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$ |
2,000 |
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$ |
2,000 |
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6.25% Senior Secured Notes due 2022 (“2022 SPL Senior Notes”) |
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1,000 |
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1,000 |
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5.625% Senior Secured Notes due 2023 (“2023 SPL Senior Notes”) |
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1,500 |
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1,500 |
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5.75% Senior Secured Notes due 2024 (“2024 SPL Senior Notes”) |
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2,000 |
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2,000 |
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5.625% Senior Secured Notes due 2025 (“2025 SPL Senior Notes”) |
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2,000 |
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2,000 |
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5.875% Senior Secured Notes due 2026 (“2026 SPL Senior Notes”) |
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1,500 |
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1,500 |
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5.00% Senior Secured Notes due 2027 (“2027 SPL Senior Notes”) |
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1,500 |
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1,500 |
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4.200% Senior Secured Notes due 2028 (“2028 SPL Senior Notes”) |
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1,350 |
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1,350 |
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5.00% Senior Secured Notes due 2037 (“2037 SPL Senior Notes”) |
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800 |
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800 |
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Cheniere Partners |
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5.250% Senior Notes due 2025 (“2025 CQP Senior Notes”) |
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1,500 |
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1,500 |
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CQP Credit Facilities |
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1,090 |
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1,090 |
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CCH |
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7.000% Senior Secured Notes due 2024 (“2024 CCH Senior Notes”) |
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1,250 |
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1,250 |
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5.875% Senior Secured Notes due 2025 (“2025 CCH Senior Notes”) |
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1,500 |
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1,500 |
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5.125% Senior Secured Notes due 2027 (“2027 CCH Senior Notes”) |
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1,500 |
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1,500 |
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CCH Credit Facility |
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3,891 |
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2,485 |
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CCH HoldCo II |
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11.0% Convertible Senior Notes due 2025 (“2025 CCH HoldCo II Convertible Senior Notes”) |
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1,378 |
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1,305 |
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Cheniere |
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4.875% Convertible Unsecured Notes due 2021 (“2021 Cheniere Convertible Unsecured Notes”) |
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1,189 |
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1,161 |
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4.25% Convertible Senior Notes due 2045 (“2045 Cheniere Convertible Senior Notes”) |
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625 |
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625 |
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$750 million Cheniere Revolving Credit Facility (“Cheniere Revolving Credit Facility”) |
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— |
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— |
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Unamortized premium, discount and debt issuance costs, net |
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(791 |
) |
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(730 |
) |
Total long-term debt, net |
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26,782 |
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25,336 |
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Current debt: |
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$1.2 billion SPL Working Capital Facility (“SPL Working Capital Facility”) |
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— |
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— |
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$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”) |
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14 |
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— |
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Cheniere Marketing trade finance facilities |
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123 |
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— |
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Total current debt |
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137 |
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— |
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Total debt, net |
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$ |
26,919 |
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$ |
25,336 |
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2018 Debt Issuances
CCH Credit Facility
In May 2018, CCH amended and restated the CCH Credit Facility to increase total commitments under the credit facility to $6.1 billion. The proceeds will be used to fund a portion of the costs of developing, constructing and placing into service the three Trains and the related facilities of the CCL Project and for related business purposes.
The CCH Credit Facility matures on June 30, 2024, with principal payments due quarterly commencing on the earlier of (1) the first quarterly payment date occurring more than three calendar months following the completion of Trains 1 through 3 of the CCL Project as defined in the common terms agreement and (2) a set date determined by reference to the date under which a certain LNG buyer linked to the last Train of the CCL Project to become operational is entitled to terminate its SPA for failure to achieve the date of first commercial delivery for that agreement. Scheduled repayments will be based upon a 19-year tailored amortization, commencing the first full quarter after the completion of Trains 1 through 3 and designed to achieve a minimum projected fixed debt service coverage ratio of 1.50:1.
Loans under the CCH Credit Facility accrue interest at a variable rate per annum equal to, at CCH’s election, LIBOR or the base rate, plus the applicable margin. The applicable margins for LIBOR loans is 1.75% and for base rate loans is 0.75%. Interest on LIBOR loans is due and payable at the end of each applicable interest period and interest on base rate loans is due and payable at the end of each quarter. CCH is required to pay certain upfront fees to the agents and lenders under the CCH Credit Facility together with additional transaction fees and expenses in the aggregate amount of $53 million.
All other terms of the CCH Credit Facility substantially remained the same, as described in Note 12—Debt of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017. The amendment and restatement of the CCH Credit Facility resulted in the recognition of $15 million of debt modification and extinguishment costs during the three and six months ended June 30, 2018 relating to the incurrence of third party fees and write off of unamortized debt issuance costs.
CCH Working Capital Facility
In June 2018, CCH amended and restated the CCH Working Capital Facility to increase total commitments under the working capital facility to $1.2 billion. The proceeds will be used for certain working capital requirements related to developing and placing into operations the CCL Project and for related business purposes.
Loans under the CCH Working Capital Facility accrue interest at a variable rate per annum equal to LIBOR or the base rate plus the applicable margin. The applicable margin for LIBOR loans ranges from 1.25% to 1.75% per annum, and the applicable margin for base rate loans ranges from 0.25% to 0.75% per annum. CCH is required to pay certain upfront fees to the agents and lenders under the CCH Working Capital Facility together with additional transaction fees and expenses in the aggregate amount of $14 million.
The CCH Working Capital Facility matures on June 29, 2023. All other terms of the CCH Working Capital Facility substantially remained the same, as described in Note 12—Debt of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017.
2025 CCH HoldCo II Convertible Senior Notes
In May 2018, the amended and restated note purchase agreement under which the 2025 CCH HoldCo II Convertible Senior Notes were issued was subsequently amended in connection with commercialization and financing of Train 3 of the CCL Project. All terms of the 2025 CCH HoldCo II Convertible Senior Notes substantially remained the same, as described in Note 12—Debt of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017.
Credit Facilities
Below is a summary of our credit facilities outstanding as of June 30, 2018 (in millions):
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SPL Working Capital Facility |
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CQP Credit Facilities |
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CCH Credit Facility |
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CCH Working Capital Facility |
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Cheniere Revolving Credit Facility |
Original facility size |
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$ |
1,200 |
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$ |
2,800 |
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$ |
8,404 |
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$ |
350 |
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$ |
750 |
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Incremental commitments |
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— |
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— |
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1,566 |
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850 |
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— |
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Less: |
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Outstanding balance |
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— |
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1,090 |
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3,891 |
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14 |
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— |
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Commitments prepaid or terminated |
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— |
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1,470 |
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3,832 |
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— |
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— |
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Letters of credit issued |
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683 |
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20 |
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— |
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305 |
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— |
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Available commitment |
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$ |
517 |
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$ |
220 |
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$ |
2,247 |
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$ |
881 |
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$ |
750 |
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Interest rate |
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LIBOR plus 1.75% or base rate plus 0.75% |
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LIBOR plus 2.25% or base rate plus 1.25% (1) |
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LIBOR plus 1.75% or base rate plus 0.75% |
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LIBOR plus 1.25% - 1.75% or base rate plus 0.25% - 0.75% |
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LIBOR plus 3.25% or base rate plus 2.25% |
Maturity date |
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December 31, 2020, with various terms for underlying loans |
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February 25, 2020, with principal payments due quarterly commencing on March 31, 2019 |
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June 30, 2024 |
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June 29, 2023 |
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March 2, 2021 |
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(1) |
There is a 0.50% step-up for both LIBOR and base rate loans beginning on February 25, 2019.
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Convertible Notes
Below is a summary of our convertible notes outstanding as of June 30, 2018 (in millions):
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2021 Cheniere Convertible Unsecured Notes |
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2025 CCH HoldCo II Convertible Senior Notes |
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2045 Cheniere Convertible Senior Notes |
Aggregate original principal |
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$ |
1,000 |
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$ |
1,000 |
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$ |
625 |
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Debt component, net of discount and debt issuance costs |
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$ |
1,081 |
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$ |
1,350 |
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$ |
310 |
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Equity component |
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$ |
207 |
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$ |
— |
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$ |
194 |
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Interest payment method |
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Paid-in-kind |
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Paid-in-kind (1) |
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Cash |
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Conversion by us (2) |
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— |
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(3) |
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(4) |
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Conversion by holders (2) |
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(5) |
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(6) |
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(7) |
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Conversion basis |
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Cash and/or stock |
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Stock |
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Cash and/or stock |
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Conversion value in excess of principal |
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$ |
— |
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$ |
— |
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$ |
— |
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Maturity date |
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May 28, 2021 |
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March 1, 2025 |
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March 15, 2045 |
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Contractual interest rate |
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4.875 |
% |
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11.0 |
% |
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4.25 |
% |
Effective interest rate (8) |
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8.4 |
% |
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11.9 |
% |
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9.4 |
% |
Remaining debt discount and debt issuance costs amortization period (9) |
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2.9 years |
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2.3 years |
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26.7 years |
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(1) |
Prior to the substantial completion of Train 2 of the CCL Project, interest will be paid entirely in kind. Following this date, the interest generally must be paid in cash; however, a portion of the interest may be paid in kind under certain specified circumstances. |
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(2) |
Conversion is subject to various limitations and conditions. |
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(3) |
Convertible on or after the later of March 1, 2020 and the substantial completion of Train 2 of the CCL Project, provided that our market capitalization is not less than $10.0 billion (“Eligible Conversion Date”). The conversion price is the lower of (1) a 10% discount to the average of the daily volume-weighted average price (“VWAP”) of our common stock for the 90 trading day period prior to the date notice is provided, and (2) a 10% discount to the closing price of our common stock on the trading day preceding the date notice is provided.
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(4) |
Redeemable at any time after March 15, 2020 at a redemption price payable in cash equal to the accreted amount of the 2045 Cheniere Convertible Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to such redemption date. |
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(5) |
Initially convertible at $93.64 (subject to adjustment upon the occurrence of certain specified events), provided that the closing price of our common stock is greater than or equal to the conversion price on the conversion date.
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(6) |
Convertible on or after the six-month anniversary of the Eligible Conversion Date, provided that our total market capitalization is not less than $10.0 billion, at a price equal to the average of the daily VWAP of our common stock for the 90 trading day period prior to the date on which notice of conversion is provided.
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(7) |
Prior to December 15, 2044, convertible only under certain circumstances as specified in the indenture; thereafter, holders may convert their notes regardless of these circumstances. The conversion rate will initially equal 7.2265 shares of our common stock per $1,000 principal amount of the 2045 Cheniere Convertible Senior Notes, which corresponds to an initial conversion price of approximately $138.38 per share of our common stock (subject to adjustment upon the occurrence of certain specified events).
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(8) |
Rate to accrete the discounted carrying value of the convertible notes to the face value over the remaining amortization period. |
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(9) |
We amortize any debt discount and debt issuance costs using the effective interest over the period through contractual maturity except for the 2025 CCH HoldCo II Convertible Senior Notes, which are amortized through the date they are first convertible by holders into our common stock.
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Restrictive Debt Covenants
As of June 30, 2018, each of our issuers was in compliance with all covenants related to their respective debt agreements.
Interest Expense
Total interest expense, including interest expense related to our convertible notes, consisted of the following (in millions):
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2018 |
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2017 |
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2018 |
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2017 |
Interest cost on convertible notes: |
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Interest per contractual rate |
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$ |
58 |
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$ |
54 |
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$ |
116 |
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$ |
107 |
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Amortization of debt discount |
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8 |
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7 |
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16 |
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14 |
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Amortization of debt issuance costs |
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2 |
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2 |
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4 |
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3 |
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Total interest cost related to convertible notes |
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68 |
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63 |
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136 |
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124 |
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Interest cost on debt excluding convertible notes |
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344 |
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314 |
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680 |
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607 |
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Total interest cost |
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412 |
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|
377 |
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816 |
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|
731 |
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Capitalized interest |
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(196 |
) |
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(189 |
) |
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(384 |
) |
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(378 |
) |
Total interest expense, net |
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$ |
216 |
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$ |
188 |
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$ |
432 |
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$ |
353 |
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Fair Value Disclosures
The following table shows the carrying amount, which is net of unamortized premium, discount and debt issuance costs, and estimated fair value of our debt (in millions):
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June 30, 2018 |
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December 31, 2017 |
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Carrying
Amount |
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Estimated
Fair Value |
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Carrying
Amount |
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Estimated
Fair Value |
Senior notes (1) |
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$ |
18,366 |
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$ |
19,153 |
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$ |
18,350 |
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$ |
20,075 |
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2037 SPL Senior Notes (2) |
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790 |
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837 |
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790 |
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871 |
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Credit facilities (3) |
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5,022 |
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5,022 |
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3,574 |
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3,574 |
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2021 Cheniere Convertible Unsecured Notes (2) |
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1,081 |
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1,233 |
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1,040 |
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1,136 |
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2025 CCH HoldCo II Convertible Senior Notes (2) |
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1,350 |
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1,547 |
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1,273 |
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1,535 |
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2045 Cheniere Convertible Senior Notes (4) |
|
310 |
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|
496 |
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|
309 |
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|
447 |
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(1) |
Includes 2021 SPL Senior Notes, 2022 SPL Senior Notes, 2023 SPL Senior Notes, 2024 SPL Senior Notes, 2025 SPL Senior Notes, 2026 SPL Senior Notes, 2027 SPL Senior Notes, 2028 SPL Senior Notes, 2025 CQP Senior Notes, 2024 CCH Senior Notes, 2025 CCH Senior Notes and 2027 CCH Senior Notes. The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of these senior notes and other similar instruments.
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(2) |
The Level 3 estimated fair value was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including our stock price and interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market. |
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(3) |
Includes SPL Working Capital Facility, CQP Credit Facilities, CCH Credit Facility, CCH Working Capital Facility, Cheniere Revolving Credit Facility and Cheniere Marketing trade finance facilities. The Level 3 estimated fair value approximates the principal amount because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.
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(4) |
The Level 1 estimated fair value was based on unadjusted quoted prices in active markets for identical liabilities that we had the ability to access at the measurement date. |
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