Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.21.1
Debt
3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]  
Debt DEBT
 
As of March 31, 2021 and December 31, 2020, our debt consisted of the following (in millions): 
March 31, December 31,
2021 2020
Long-term debt:
SPL — 4.200% to 6.25% senior secured notes due between March 2022 and September 2037 and working capital facility (“2020 SPL Working Capital Facility”)
$ 12,797  $ 13,650 
Cheniere Partners 4.000% to 5.625% senior notes due between October 2025 and March 2031 and credit facilities (“2019 CQP Credit Facilities”)
4,100  4,100 
CCH 3.52% to 7.000% senior secured notes due between June 2024 and December 2039 and CCH Credit Facility
10,195  10,217 
Cheniere 4.625% senior secured notes due October 2028 (the “2028 Cheniere Senior Secured Notes”), convertible notes, revolving credit facility (“Cheniere Revolving Credit Facility”) and term loan facility (“Cheniere Term Loan Facility”)
2,997  3,145 
Unamortized premium, discount and debt issuance costs, net (624) (641)
Total long-term debt, net 29,465  30,471 
Current debt:
SPL — current portion of 6.25% senior secured notes due March 2022 (“2022 SPL Senior Notes”) (1)
853  — 
CCH $1.2 billion CCH working capital facility (“CCH Working Capital Facility”) and current portion of CCH Credit Facility
153  271 
Cheniere Marketing — trade finance facilities
—  — 
Cheniere — current portion of 4.875% convertible unsecured notes due May 2021 (“2021 Cheniere Convertible Unsecured Notes”) (2)
104 104 
Unamortized premium, discount and debt issuance costs, net (5) (3)
Total current debt 1,105  372 
Total debt, net $ 30,570  $ 30,843 
(1)$147 million of the 2022 SPL Senior Notes is categorized as long-term debt because the proceeds from the expected sale of approximately $147 million aggregate principal amount of 2.95% Senior Secured Notes due 2037, expected to be issued in the second half of 2021 pursuant to a note purchase agreement entered into by SPL in February 2021, are expected to be used to refinance a portion of 2022 SPL Senior Notes.
(2)$372 million of the 2021 Cheniere Convertible Unsecured Notes is categorized as long-term debt because the remaining available commitments under the Cheniere Term Loan Facility are expected to be used to repay and/or repurchase a portion of the remaining outstanding principal amount of the 2021 Cheniere Convertible Unsecured Notes.

Issuances and Redemptions

The following table shows the issuances and redemptions of long-term debt during the three months ended March 31, 2021 (in millions):
Issuances Principal Amount Issued
CQP — 4.000% Senior Notes due 2031 (the “2031 CQP Senior Notes”) (1)
$ 1,500 
Redemptions Amount Redeemed
CQP — 5.250% Senior Notes due 2025 (the “2025 CQP Senior Notes”) (1)
$ 1,500 
Cheniere — Cheniere Term Loan Facility
148 
Three Months Ended March 31, 2021 total $ 1,648 
(1)Proceeds of the 2031 CQP Senior Notes, together with cash on hand, were used to redeem all of CQP’s outstanding 2025 CQP Senior Notes, resulting in the recognition of debt extinguishment costs of $54 million for the three months ended March 31, 2021 relating to the payment of early redemption fees and write off of unamortized debt premium and issuance costs.
Credit Facilities and Delayed Draw Term Loan

Below is a summary of our credit facilities and delayed draw term loan facility outstanding as of March 31, 2021 (in millions):
2020 SPL Working Capital Facility (1) 2019 CQP Credit Facilities CCH Credit Facility CCH Working Capital Facility Cheniere Revolving Credit Facility Cheniere Term Loan Facility (2)
Original facility size $ 1,200  $ 1,500  $ 8,404  $ 350  $ 750  $ 2,620 
Incremental commitments —  —  1,566  850  500  75 
Less:
Outstanding balance —  —  2,627  —  —  — 
Commitments prepaid or terminated —  750  7,343  —  —  2,323 
Letters of credit issued 413  —  —  293  —  — 
Available commitment $ 787  $ 750  $ —  $ 907  $ 1,250  $ 372 
Priority ranking Senior secured Senior secured Senior secured Senior secured Senior secured Senior secured
Interest rate on available balance
LIBOR plus 1.125% - 1.750% or base rate plus 0.125% - 0.750%
LIBOR plus 1.25% - 2.125% or base rate plus 0.25% - 1.125%
LIBOR plus 1.75% or base rate plus 0.75%
LIBOR plus 1.25% - 1.75% or base rate plus 0.25% - 0.75%
LIBOR plus 1.75% - 2.50% or base rate plus 0.75% - 1.50%
(3)
Weighted average interest rate of outstanding balance n/a n/a 1.86% n/a n/a n/a
Maturity date March 19, 2025 May 29, 2024 June 30, 2024 June 29, 2023 December 13, 2022 June 18, 2023
(1)The 2020 SPL Working Capital Facility contains customary conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. 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 loans, (2) letters of credit issued and (3) the outstanding principal amount of swing line loans.
(2)Borrowings under the Cheniere Term Loan Facility are subject to customary conditions precedent. The remaining commitments under the Cheniere Term Loan Facility are expected to be used to repay and/or repurchase a portion of the remaining principal amount of the 2021 Cheniere Convertible Unsecured Notes and for the payment of related fees and expenses. We pay a commitment fee equal to 30% of the margin for LIBOR loans multiplied by the average daily amount of undrawn commitments. If the Cheniere Term Loan Facility is still outstanding on the first anniversary of the Closing Date, as defined by the credit agreement, we will pay duration fees in an amount equal to 0.25% of the aggregate amount of commitments as of July 10, 2020, which was the date the loans were first borrowed under the Cheniere Term Loan Facility (the “Payment Date”). Furthermore, if the Cheniere Term Loan Facility is still outstanding on the second anniversary of the Closing Date, as defined by the credit agreement, we will pay 0.50% of the aggregate amount of commitments as of the Payment Date. Annual administrative fees must also be paid to the administrative agent for the Cheniere Term Loan Facility. Subject to customary exceptions, we are required to make mandatory prepayments with respect to the Cheniere Term Loan Facility using the net proceeds of certain events on a pro rata basis and on terms consistent with required prepayments under the Cheniere Revolving Credit Facility.
(3)LIBOR plus (1) 2.00% to 2.75% per annum in the first year, (2) 2.50% to 3.25% per annum in the second year and (3) 3.00% to 3.75% per annum in the third year until maturity, or base rate plus (1) 1.00% to 1.75% per annum in the first year, (2) 1.50% to 2.25% per annum in the second year and (3) 2.00% to 2.75% per annum in the third year until maturity.
Convertible Notes

Below is a summary of our convertible notes outstanding as of March 31, 2021 (in millions):
2021 Cheniere Convertible Unsecured Notes 2045 Cheniere Convertible Senior Notes
Aggregate original principal $ 1,000  $ 625 
Add: interest paid-in-kind 320  — 
Less: aggregate principal redeemed (844) — 
Aggregate remaining principal $ 476  $ 625 
Debt component, net of discount and debt issuance costs $ 473  $ 318 
Equity component $ 201  $ 194 
Interest payment method Paid-in-kind Cash
Conversion by us (1) —  (2)
Conversion by holders (1) (3) (4)
Conversion basis Cash and/or stock Cash and/or stock
Conversion value in excess of principal $ —  $ — 
Maturity date May 28, 2021 March 15, 2045
Contractual interest rate 4.875  % 4.25  %
Effective interest rate (5) 8.1  % 9.4  %
Remaining debt discount and debt issuance costs amortization period (6) 0.2 years 24.0 years
(1)Conversion is subject to various limitations and conditions, which have not been met as of the balance sheet date.
(2)Redeemable at any time at a redemption price payable in cash equal to the accreted amount of the $625 million aggregate principal amount of 4.25% Convertible Senior Notes due 2045 (the “2045 Cheniere Convertible Senior Notes”) to be redeemed, plus accrued and unpaid interest, if any, to such redemption date.
(3)Initially convertible at $93.64 (subject to adjustment upon the occurrence of certain specified events, which have not been met as of the balance sheet date), provided that the closing price of our common stock is greater than or equal to the conversion price on the conversion date.
(4)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).
(5)Rate to accrete the discounted carrying value of the convertible notes to the face value over the remaining amortization period.
(6)We amortize any debt discount and debt issuance costs using the effective interest over the period through contractual maturity.

Restrictive Debt Covenants

The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events of default and certain covenants that, among other things, may limit us, our subsidiaries’ and its restricted subsidiaries’ ability to make certain investments or pay dividends or distributions.

As of March 31, 2021, each of our issuers was in compliance with all covenants related to their respective debt agreements.
Interest Expense

Total interest expense, net of capitalized interest, including interest expense related to our convertible notes, consisted of the following (in millions):
  Three Months Ended March 31,
2021 2020
Interest cost on convertible notes:
Interest per contractual rate $ 12  $ 63 
Amortization of debt discount 14 
Amortization of debt issuance costs — 
Total interest cost related to convertible notes 17  80 
Interest cost on debt and finance leases excluding convertible notes 400  391 
Total interest cost 417  471 
Capitalized interest (61) (59)
Total interest expense, net of capitalized interest $ 356  $ 412 

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in millions):
  March 31, 2021 December 31, 2020
  Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
Senior notes Level 2 (1)
$ 24,700  $ 27,229  $ 24,700  $ 27,897 
Senior notes Level 3 (2)
2,771  3,129  2,771  3,423 
Credit facilities (3) 2,627  2,627  2,915  2,915 
2021 Cheniere Convertible Unsecured Notes (2) 476  484  476  480 
2045 Cheniere Convertible Senior Notes (4) 625  522  625  496 
(1)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.
(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. 
(3)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.
(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.