| Debt |
DEBT
As of June 30, 2019 and December 31, 2018, our debt consisted of the following (in millions):
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June 30, |
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December 31, |
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2019 |
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2018 |
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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5.625% Senior Notes due 2026 (“2026 CQP Senior Notes”) |
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1,100 |
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1,100 |
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2016 CQP Credit Facilities |
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— |
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— |
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2019 CQP Credit Facilities |
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649 |
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— |
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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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6,138 |
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5,156 |
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CCH HoldCo II |
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11.0% Convertible Senior Secured Notes due 2025 (“2025 CCH HoldCo II Convertible Senior Notes”) |
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1,536 |
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1,455 |
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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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1,248 |
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1,218 |
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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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$1.25 billion 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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(752 |
) |
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(775 |
) |
Total long-term debt, net |
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29,944 |
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28,179 |
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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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$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”) |
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— |
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168 |
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Cheniere Marketing trade finance facilities |
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— |
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71 |
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Total current debt |
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— |
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239 |
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Total debt, net |
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$ |
29,944 |
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$ |
28,418 |
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2019 Debt Issuances and Terminations
2016 CQP Credit Facilities
In May 2019, the remaining commitments under the 2016 CQP Credit Facilities were terminated. There were no write-offs of debt issuance costs associated with the termination of the 2016 CQP Credit Facilities.
2019 CQP Credit Facilities
In May 2019, Cheniere Partners entered into the $1.5 billion 2019 CQP Credit Facilities, which consist of a $750 million term loan (“CQP Term Facility”) and a $750 million revolving credit facility (“CQP Revolving Facility”). Borrowings under the 2019 CQP Credit Facilities will be used to fund the development and construction of Train 6 of the SPL Project and subject to a sublimit, for general corporate purposes. The CQP Revolving Facility is also available for the issuance of letters of credit.
Loans under the 2019 CQP Credit Facilities will accrue interest at a variable rate per annum equal to LIBOR or the base rate (equal to the highest of the prime rate, the federal funds effective rate, as published by the Federal Reserve Bank of New York, plus 0.50%, and the adjusted one-month LIBOR plus 1.0%), plus the applicable margin. Under the CQP Term Facility, the applicable margin for LIBOR loans is 1.50% per annum, and the applicable margin for base rate loans is 0.50% per annum, in each case with a 0.25% step-up beginning on May 29, 2022. Under the CQP Revolving Facility, the applicable margin for LIBOR loans is 1.25% to 2.125% per annum, and the applicable margin for base rate loans is 0.25% to 1.125% per annum, in each case depending on the then-current rating of Cheniere Partners. Interest on LIBOR loans is due and payable at the end of each applicable LIBOR period (and at the end of every three-month period within the LIBOR period, if any), and interest on base rate loans is due and payable at the end of each calendar quarter.
Cheniere Partners incurred $20 million of discounts and debt issuance costs in conjunction with the entry into the 2019 CQP Credit Facilities. Cheniere Partners pays a commitment fee equal to an annual rate of 30% of the margin for LIBOR loans multiplied by the average daily amount of the undrawn commitment, payable quarterly in arrears.
The 2019 CQP Credit Facilities mature on May 29, 2024. The principal of any loans under the 2019 CQP Credit Facilities must be repaid in quarterly installments commencing on May 29, 2023 based on an amortization schedule. Any outstanding balance may be repaid, in whole or in part, at any time without premium or penalty, except for interest hedging and interest rate breakage costs. The 2019 CQP Credit Facilities contain conditions precedent for extensions of credit, as well as customary affirmative and negative covenants, and limit Cheniere Partners’ ability to make restricted payments, including distributions, to once per fiscal quarter and one true-up per fiscal quarter as long as certain conditions are satisfied.
The 2019 CQP Credit Facilities are unconditionally guaranteed by each subsidiary of Cheniere Partners other than SPL, Sabine Pass LNG-LP, LLC and certain subsidiaries of Cheniere Partners owning other development projects, as well as certain other specified subsidiaries and members of the foregoing entities.
Credit Facilities
Below is a summary of our credit facilities outstanding as of June 30, 2019 (in millions):
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SPL Working Capital Facility (1) |
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2019 CQP Credit Facilities |
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CCH Credit Facility |
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CCH Working Capital Facility |
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Cheniere Revolving Credit Facility |
Original facility size |
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$ |
1,200 |
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$ |
1,500 |
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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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500 |
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Less: |
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Outstanding balance |
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— |
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649 |
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6,138 |
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— |
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— |
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Commitments prepaid or terminated |
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— |
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— |
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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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415 |
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— |
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— |
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338 |
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— |
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Available commitment |
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$ |
785 |
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$ |
851 |
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$ |
— |
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$ |
862 |
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$ |
1,250 |
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Interest rate on outstanding balance |
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LIBOR plus 1.75% or base rate plus 0.75% |
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(2) |
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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 1.75% - 2.50% or base rate plus 0.75% - 1.50% |
Weighted average interest rate of outstanding balance |
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n/a |
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3.92% |
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4.15% |
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n/a |
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n/a |
Maturity date |
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December 31, 2020 |
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May 29, 2024 |
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June 30, 2024 |
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June 29, 2023 |
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December 23, 2022 |
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(1) |
The SPL Working Capital Facility was amended in May 2019 in connection with commercialization and financing of Train 6 of the SPL Project. All terms of the SPL Working Capital Facility substantially remained unchanged. |
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(2) |
LIBOR plus 1.50% or base rate plus 0.50%, with a 0.25% step-up beginning on May 29, 2022 for the CQP Term Facility. LIBOR plus 1.25% to 2.125% or base rate plus 0.25% to 1.125%, depending on the then-current rating of Cheniere Partners for the CQP Revolving Facility.
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Convertible Notes
Below is a summary of our convertible notes outstanding as of June 30, 2019 (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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$ |
1,172 |
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$ |
1,519 |
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$ |
311 |
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Equity component |
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$ |
210 |
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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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May 13, 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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1.9 years |
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1.3 years |
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25.7 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 $138.38 per share of our common stock (subject to adjustment upon the occurrence of certain specified events).
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(8) |
Rate to accrete the discounted carrying value of the convertible notes to the face value over the remaining amortization period. |
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(9) |
We amortize any debt discount and debt issuance costs using the effective interest over the period through contractual maturity except for the 2025 CCH HoldCo II Convertible Senior Notes, which are amortized through the date they are first convertible by holders into our common stock.
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Restrictive Debt Covenants
As of June 30, 2019, each of our issuers was in compliance with all covenants related to their respective debt agreements.
Interest Expense
Total interest expense, including interest expense related to our convertible notes, consisted of the following (in millions):
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2019 |
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2018 |
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2019 |
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2018 |
Interest cost on convertible notes: |
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Interest per contractual rate |
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$ |
64 |
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$ |
58 |
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$ |
126 |
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$ |
116 |
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Amortization of debt discount |
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9 |
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8 |
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19 |
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16 |
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Amortization of debt issuance costs |
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3 |
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2 |
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6 |
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4 |
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Total interest cost related to convertible notes |
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76 |
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|
68 |
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151 |
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|
136 |
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Interest cost on debt and finance leases excluding convertible notes |
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382 |
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344 |
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|
755 |
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|
680 |
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Total interest cost |
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458 |
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412 |
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|
906 |
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|
816 |
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Capitalized interest |
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(86 |
) |
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(196 |
) |
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(287 |
) |
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(384 |
) |
Total interest expense, net |
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$ |
372 |
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$ |
216 |
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$ |
619 |
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$ |
432 |
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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, 2019 |
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December 31, 2018 |
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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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$ |
19,483 |
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$ |
21,499 |
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$ |
19,466 |
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$ |
19,901 |
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2037 SPL Senior Notes (2) |
|
791 |
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|
912 |
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|
791 |
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|
817 |
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Credit facilities (3) |
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6,668 |
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6,668 |
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5,294 |
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5,294 |
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2021 Cheniere Convertible Unsecured Notes (2) |
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1,172 |
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1,302 |
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1,126 |
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1,236 |
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2025 CCH HoldCo II Convertible Senior Notes (2) |
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1,519 |
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1,771 |
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1,432 |
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1,612 |
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2045 Cheniere Convertible Senior Notes (4) |
|
311 |
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|
489 |
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|
310 |
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|
431 |
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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, 2026 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, 2016 CQP Credit Facilities, 2019 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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