| Debt |
DEBT
As of March 31, 2020 and December 31, 2019, our debt consisted of the following (in millions):
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March 31, |
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December 31, |
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2020 |
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2019 |
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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$ |
— |
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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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$1.2 billion SPL Working Capital Facility executed in 2020 (“2020 SPL Working Capital Facility”)
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— |
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— |
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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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4.500% Senior Notes due 2029 (“2029 CQP Senior Notes”) |
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1,500 |
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1,500 |
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CQP Credit Facilities executed in 2019 (“2019 CQP Credit Facilities”) |
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— |
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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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4.80% Senior Secured Notes due 2039 (“4.80% CCH Senior Notes”) |
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727 |
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727 |
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3.925% Senior Secured Notes due 2039 (“3.925% CCH Senior Notes”) |
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475 |
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475 |
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3.700% Senior Secured Notes due 2029 (“2029 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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3,283 |
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3,283 |
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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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1,278 |
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1,578 |
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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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1,278 |
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1,278 |
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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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455 |
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— |
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Unamortized premium, discount and debt issuance costs, net |
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(681 |
) |
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(692 |
) |
Total long-term debt, net |
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28,940 |
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30,774 |
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Current debt: |
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2021 SPL Senior Notes |
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2,000 |
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— |
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$1.2 billion SPL Working Capital Facility executed in 2015 (“2015 SPL Working Capital Facility”) |
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— |
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— |
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$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”) |
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141 |
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— |
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Cheniere Marketing trade finance facilities |
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— |
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— |
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Unamortized premium, discount and debt issuance costs, net |
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(4 |
) |
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— |
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Total current debt |
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2,137 |
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— |
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Total debt, net |
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$ |
31,077 |
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$ |
30,774 |
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2020 Material Debt Activities
2020 SPL Working Capital Facility
In March 2020, SPL entered into the 2020 SPL Working Capital Facility with aggregate commitments of $1.2 billion, which replaced the 2015 SPL Working Capital Facility. The 2020 SPL Working Capital Facility is intended to be used for loans to SPL (“SPL Revolving Loans”), swing line loans to SPL (“SPL Swing Line Loans”) and the issuance of letters of credit on behalf of SPL, primarily for (1) the refinancing of the 2015 SPL Working Capital Facility, (2) fees and expenses related to the 2020 SPL Working Capital Facility, (3) SPL’s gas purchase obligations and (4) SPL and certain of its future subsidiaries’ general corporate purposes. SPL may, from time to time, request increases in the commitments under the 2020 SPL Working Capital Facility of up to $800 million.
Loans under the 2020 SPL Working Capital Facility accrue interest at a variable rate per annum equal to LIBOR or the base rate (equal to the highest of the senior facility agent’s published prime rate, the federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50% and one month LIBOR plus 0.50%), plus the applicable margin. The applicable margin for LIBOR loans under the 2020 SPL Working Capital Facility is 1.125% to 1.750% per annum (depending on the then-current rating of SPL), and the applicable margin for base rate loans under the 2020 SPL Working Capital Facility is 0.125% to 0.750% per annum (depending on the then-current rating of SPL). Interest on LIBOR loans is due and payable at the end of each applicable LIBOR period, and interest on base rate loans is due and payable at the end of each fiscal quarter.
SPL pays a commitment fee equal to an annual rate of 0.1% to 0.3% (depending on the then-current rating of SPL), which accrues on the daily amount of the total commitment less the sum of (1) the outstanding principal amount of SPL Revolving Loans, (2) letters of credit issued and (3) the outstanding principal amount of SPL Swing Line Loans. If draws are made upon a letter of credit issued under the 2020 SPL Working Capital Facility and SPL does not elect for such draw to be deemed an SPL LC Loan (an “SPL LC Draw”), SPL is required to pay the full amount of the SPL LC Draw on or prior to noon eastern time on the business day of the SPL LC Draw. An SPL LC Draw accrues interest at the base rate plus the applicable margin. As of March 31, 2020, no SPL LC Draws had been made upon any letters of credit issued under the 2020 SPL Working Capital Facility.
The 2020 SPL Working Capital Facility matures on March 19, 2025, but may be extended with consent of the lenders. The 2020 SPL Working Capital Facility provides for mandatory prepayments under customary circumstances.
The 2020 SPL Working Capital Facility contains customary conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. SPL is restricted from making certain distributions under agreements governing its indebtedness generally until, among other requirements, satisfaction of a 12-month forward-looking and backward-looking 1.25:1.00 debt service reserve ratio test. The obligations of SPL under the 2020 SPL Working Capital Facility are secured by substantially all of the assets of SPL as well as a pledge of all of the membership interests in SPL and certain future subsidiaries of SPL on a pari passu basis by a first priority lien with the SPL Senior Notes.
2025 CCH HoldCo II Convertible Senior Notes
In February 2020, the amended and restated note purchase agreement for the 2025 CCH HoldCo II Convertible Senior Notes was amended to allow CCH HoldCo II the option to redeem all or a portion of the outstanding notes with cash at a price of $1,080 per $1,000 principal amount, at the time of any CCH HoldCo II- or noteholder-initiated conversion through September 2, 2020. In March 2020, CCH HoldCo II redeemed an aggregate outstanding principal amount of $300 million with cash. CCH HoldCo II retains the ability to convert the 2025 CCH HoldCo II Convertible Senior Notes into our common stock at a conversion price equal to the lower of (1) a 10% discount to the average of the daily volume-weighted average price (“VWAP”) of our common stock for the 90 trading day period prior to the date on which notice of conversion is provided and (2) a 10% discount to the closing price of our common stock on the trading day preceding the date on which notice of conversion is provided. The noteholders retain the ability to request conversion into our common stock at a conversion price equal to the average of the daily VWAP of our common stock for the 90 trading day period preceding the date on which notice of requested conversion is provided. Conversions remain subject to various limitations and conditions.
Credit Facilities
Below is a summary of our credit facilities outstanding as of March 31, 2020 (in millions):
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2020 SPL Working Capital Facility |
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2019 CQP Credit Facilities |
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CCH Credit Facility |
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CCH Working Capital Facility |
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Cheniere Revolving Credit Facility |
Original facility size |
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$ |
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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— |
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3,283 |
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141 |
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455 |
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Commitments prepaid or terminated |
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— |
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750 |
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6,687 |
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— |
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— |
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Letters of credit issued |
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414 |
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— |
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— |
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399 |
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365 |
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Available commitment |
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$ |
786 |
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$ |
750 |
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$ |
— |
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$ |
660 |
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$ |
430 |
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Interest rate on available balance |
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LIBOR plus 1.125% - 1.750% or base rate plus 0.125% - 0.750% |
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LIBOR plus 1.25% - 2.125% or base rate plus 0.25% - 1.125% |
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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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n/a |
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2.74% |
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2.77% |
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2.70% |
Maturity date |
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March 19, 2025 |
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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 13, 2022 |
Convertible Notes
Below is a summary of our convertible notes outstanding as of March 31, 2020 (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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Add: interest paid-in-kind |
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278 |
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578 |
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— |
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Less: aggregate principal redeemed |
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— |
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(300 |
) |
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— |
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Aggregate remaining principal |
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$ |
1,278 |
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$ |
1,278 |
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$ |
625 |
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Debt component, net of discount and debt issuance costs |
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$ |
1,230 |
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$ |
1,250 |
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$ |
315 |
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Equity component |
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$ |
211 |
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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 / cash (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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(3) |
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(6) |
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Conversion basis |
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Cash and/or stock |
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Cash and/or 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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n/a |
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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 (7) |
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8.2 |
% |
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12.2 |
% |
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9.4 |
% |
Remaining debt discount and debt issuance costs amortization period (8) |
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1.2 years |
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0.5 years |
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25.0 years |
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(1) |
Prior to the substantial completion of Train 2 of the CCL Project in August 2019, interest was paid entirely in kind. Following substantial completion, the interest has been paid in cash; however, a portion of the interest may, in the future, 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 into cash or stock at our option on or after March 1, 2020 until September 2, 2020, and into stock upon conversion notice by us or note holders after September 2, 2020, provided that our market capitalization is not less than $10.0 billion (“Eligible Conversion Date”). The conversion price for stock is the lower of (1) a 10% discount to the average of the VWAP of our common stock for the 90 trading day period prior to the date notice is provided, and (2) a
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10% discount to the closing price of our common stock on the trading day preceding the date notice is provided. The conversion price for cash is $1,080 per $1,000 principal amount of the notes. In March 2020, we delivered our first notice to convert notes in an aggregate outstanding principal amount of $300 million into cash.
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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) |
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 $138.38 per share of our common stock (subject to adjustment upon the occurrence of certain specified events).
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(7) |
Rate to accrete the discounted carrying value of the convertible notes to the face value over the remaining amortization period. |
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(8) |
We amortize any debt discount and debt issuance costs using the effective interest over the period through contractual maturity except for the 2025 CCH HoldCo II Convertible Senior Notes, which are amortized through the date they are first convertible by holders into our common stock.
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Restrictive Debt Covenants
As of March 31, 2020, each of our issuers was in compliance with all covenants related to their respective debt agreements.
Interest Expense
Total interest expense, including interest expense related to our convertible notes, consisted of the following (in millions):
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Three Months Ended March 31, |
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2020 |
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2019 |
Interest cost on convertible notes: |
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Interest per contractual rate |
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$ |
63 |
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$ |
62 |
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Amortization of debt discount |
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14 |
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10 |
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Amortization of debt issuance costs |
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3 |
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3 |
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Total interest cost related to convertible notes |
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80 |
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75 |
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Interest cost on debt and finance leases excluding convertible notes |
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391 |
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373 |
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Total interest cost |
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471 |
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448 |
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Capitalized interest |
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(59 |
) |
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(201 |
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Total interest expense, net |
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$ |
412 |
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$ |
247 |
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Fair Value Disclosures
The following table shows the carrying amount and estimated fair value of our debt (in millions):
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March 31, 2020 |
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December 31, 2019 |
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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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$ |
22,700 |
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$ |
20,805 |
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$ |
22,700 |
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$ |
24,650 |
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2037 SPL Senior Notes (2) |
|
800 |
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|
709 |
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|
800 |
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|
934 |
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4.80% CCH Senior Notes (2) |
|
727 |
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|
594 |
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|
727 |
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|
830 |
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3.925% CCH Senior Notes (2) |
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475 |
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|
350 |
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475 |
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|
495 |
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Credit facilities (3) |
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3,879 |
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3,879 |
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3,283 |
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3,283 |
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2021 Cheniere Convertible Unsecured Notes (2) |
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1,278 |
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1,248 |
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1,278 |
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|
1,312 |
|
2025 CCH HoldCo II Convertible Senior Notes (2) |
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1,278 |
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1,406 |
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1,578 |
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1,807 |
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2045 Cheniere Convertible Senior Notes (4) |
|
625 |
|
|
281 |
|
|
625 |
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|
498 |
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(1) |
Includes the SPL Senior Notes except the 2037 SPL Senior Notes, the CQP Senior Notes and the 144A 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 2015 SPL Working Capital Facility, 2020 SPL Working Capital Facility, 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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