Cheniere Energy, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Debt (Tables)

Debt (Tables)

6 Months Ended

Jun. 30, 2020

As of June 30, 2020 and December 31, 2019, our debt consisted of the following (in millions):



	June 30,			December 31,
	2020			2019
Long-term debt:
SPL
5.625% Senior Secured Notes due 2021 (“2021 SPL Senior Notes”)	$	—		$	2,000
6.25% Senior Secured Notes due 2022 (“2022 SPL Senior Notes”)	1,000			1,000
5.625% Senior Secured Notes due 2023 (“2023 SPL Senior Notes”)	1,500			1,500
5.75% Senior Secured Notes due 2024 (“2024 SPL Senior Notes”)	2,000			2,000
5.625% Senior Secured Notes due 2025 (“2025 SPL Senior Notes”)	2,000			2,000
5.875% Senior Secured Notes due 2026 (“2026 SPL Senior Notes”)	1,500			1,500
5.00% Senior Secured Notes due 2027 (“2027 SPL Senior Notes”)	1,500			1,500
4.200% Senior Secured Notes due 2028 (“2028 SPL Senior Notes”)	1,350			1,350
4.500% Senior Secured Notes due 2030 (“2030 SPL Senior Notes”)	2,000			—
5.00% Senior Secured Notes due 2037 (“2037 SPL Senior Notes”)	800			800
$1.2 billion SPL Working Capital Facility executed in 2020 (“2020 SPL Working Capital Facility”)	—			—
Cheniere Partners
5.250% Senior Notes due 2025 (“2025 CQP Senior Notes”)	1,500			1,500
5.625% Senior Notes due 2026 (“2026 CQP Senior Notes”)	1,100			1,100
4.500% Senior Notes due 2029 (“2029 CQP Senior Notes”)	1,500			1,500
CQP Credit Facilities executed in 2019 (“2019 CQP Credit Facilities”)	—			—
CCH
7.000% Senior Secured Notes due 2024 (“2024 CCH Senior Notes”)	1,250			1,250
5.875% Senior Secured Notes due 2025 (“2025 CCH Senior Notes”)	1,500			1,500
5.125% Senior Secured Notes due 2027 (“2027 CCH Senior Notes”)	1,500			1,500
3.700% Senior Secured Notes due 2029 (“2029 CCH Senior Notes”)	1,500			1,500
4.80% Senior Secured Notes due 2039 (“4.80% CCH Senior Notes”)	727			727
3.925% Senior Secured Notes due 2039 (“3.925% CCH Senior Notes”)	475			475
CCH Credit Facility	3,283			3,283
CCH HoldCo II
11.0% Convertible Senior Secured Notes due 2025 (“2025 CCH HoldCo II Convertible Senior Notes”)	1,278			1,578
Cheniere
4.875% Convertible Unsecured Notes due 2021 (“2021 Cheniere Convertible Unsecured Notes”)	1,216			1,278
4.25% Convertible Senior Notes due 2045 (“2045 Cheniere Convertible Senior Notes”)	625			625
$1.25 billion Cheniere Revolving Credit Facility (“Cheniere Revolving Credit Facility”)	375			—
$2.62 billion Cheniere Term Loan Credit Agreement (“Cheniere Term Loan Facility”)	—			—
Unamortized premium, discount and debt issuance costs, net	(672		)	(692		)
Total long-term debt, net	30,807			30,774

Current debt:
2021 Cheniere Convertible Unsecured Notes	93			—
$1.2 billion SPL Working Capital Facility executed in 2015 (“2015 SPL Working Capital Facility”)	—			—
$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”)	141			—
Cheniere Marketing trade finance facilities	6			—
Unamortized premium, discount and debt issuance costs, net	(3		)	—
Total current debt	237			—

Total debt, net	$	31,044		$	30,774

Schedule of Line of Credit Facilities

Below is a summary of our credit facilities outstanding as of June 30, 2020 (in millions):



	2020 SPL Working Capital Facility		2019 CQP Credit Facilities		CCH Credit Facility		CCH Working Capital Facility		Cheniere Revolving Credit Facility		Cheniere Term Loan Facility (1)
Original facility size	$	1,200	$	1,500	$	8,404	$	350	$	750	$	2,620
Incremental commitments	—		—		1,566		850		500		—
Less:
Outstanding balance	—		—		3,283		141		375		—
Commitments prepaid or terminated	—		750		6,687		—		—		—
Letters of credit issued	409		—		—		392		313		—
Available commitment	$	791	$	750	$	—	$	667	$	562	$	2,620

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%		(2)
Weighted average interest rate of outstanding balance	n/a		n/a		1.93%		1.43%		1.93%		n/a
Maturity date	March 19, 2025		May 29, 2024		June 30, 2024		June 29, 2023		December 13, 2022		June 18, 2023


(1)	In July 2020, we received incremental commitments of $75 million and borrowed $2,323 million under the Cheniere Term Loan Facility, which reduced the available commitment to $372 million following these transactions.

(2)

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.

Schedule of Convertible Debt

Below is a summary of our convertible notes outstanding as of June 30, 2020 (in millions):



	2021 Cheniere Convertible Unsecured Notes (1)			2025 CCH HoldCo II Convertible Senior Notes			2045 Cheniere Convertible Senior Notes
Aggregate original principal	$	1,000		$	1,000		$	625
Add: interest paid-in-kind	309			578			—
Less: aggregate principal redeemed	—			(300		)	—
Aggregate remaining principal	$	1,309		$	1,278		$	625

Debt component, net of discount and debt issuance costs	$	1,271		$	1,264		$	316
Equity component	$	211		$	—		$	194
Interest payment method	Paid-in-kind			Paid-in-kind / cash (2)			Cash
Conversion by us (3)	—			(4)			(5)
Conversion by holders (3)	(6)			(4)			(7)
Conversion basis	Cash and/or stock			Cash and/or stock			Cash and/or stock
Conversion value in excess of principal	$	—		n/a			$	—
Maturity date	May 28, 2021			May 13, 2025			March 15, 2045
Contractual interest rate	4.875		%	11.0		%	4.25		%
Effective interest rate (8)	8.1		%	15.6		%	9.4		%
Remaining debt discount and debt issuance costs amortization period (9)	0.9 years			0.3 years			24.7 years

(1)

In July 2020, we subsequently repurchased $844 million in aggregate principal amount of outstanding notes at individually negotiated prices from a small number of investors. The aggregate remaining principal after this repurchase was $465 million, which exceeded the remaining commitments under the Cheniere Term Loan Facility by $93 million. As such, $93 million has been reflected as current debt on our Consolidated Balance Sheet as of June 30, 2020.


(2)	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.


(3)	Conversion is subject to various limitations and conditions.

(4)

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 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. The conversion price for cash is $1,080 per $1,000 principal amount of the notes. We redeemed an aggregate outstanding principal amount of $300 million in March 2020 and redeemed the remaining outstanding principal amount in July 2020, both with cash.


(5)	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.


(6)	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.

(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).


(8)	Rate to accrete the discounted carrying value of the convertible notes to the face value over the remaining amortization period.

(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.

Schedule of 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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Interest cost on convertible notes:
Interest per contractual rate	$	57		$	64		$	120		$	126
Amortization of debt discount	20			9			34			19
Amortization of debt issuance costs	4			3			7			6
Total interest cost related to convertible notes	81			76			161			151
Interest cost on debt and finance leases excluding convertible notes	388			382			779			755
Total interest cost	469			458			940			906
Capitalized interest	(62		)	(86		)	(121		)	(287		)
Total interest expense, net of capitalized interest	$	407		$	372		$	819		$	619

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

The following table shows the carrying amount and estimated fair value of our debt (in millions):



	June 30, 2020				December 31, 2019
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Senior notes (1)	$	22,700	$	24,698	$	22,700	$	24,650
2037 SPL Senior Notes (2)	800		948		800		934
4.80% CCH Senior Notes (2)	727		841		727		830
3.925% CCH Senior Notes (2)	475		502		475		495
Credit facilities (3)	3,805		3,805		3,283		3,283
2021 Cheniere Convertible Unsecured Notes (2)	1,309		1,332		1,278		1,312
2025 CCH HoldCo II Convertible Senior Notes (2)	1,278		1,495		1,578		1,807
2045 Cheniere Convertible Senior Notes (4)	625		394		625		498

(1)

Includes (1) the SPL Senior Notes except the 2037 SPL Senior Notes, (2) all series of the CQP senior notes including the 2025 CQP Senior Notes, 2026 CQP Senior Notes and 2029 CQP Senior Notes and (3) the CCH senior notes sold on a private placement basis in reliance on Section 4(a)(2) of the Securities Act and Rule 144A and Regulation S thereunder including the 2024 CCH Senior Notes, 2025 CCH Senior Notes, 2027 CCH Senior Notes and 2029 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.


(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)	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, Cheniere Term Loan 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.

(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.