Cheniere Energy Inc. entered into a subscription agreement with RRJ Capital II Ltd. under which investment funds managed by RRJ will purchase a total of $1 billion in unsecured convertible payable in kind notes issued by Cheniere. RRJ will have the right to transfer a portion of the convertible notes to Temasek Holdings Ltd. and its affiliates. Proceeds will be used to fund a portion of the costs of developing, constructing and placing into service the Corpus Christi liquefaction project, which is being designed for up to three trains with an expected aggregate annual production capacity of approximately 13.5 million tons per year, related pipeline infrastructure, and general corporate purposes.
The convertible notes will have a maturity of six and a half years, and accrue interest at a rate of 4.875% per year, which is payable in-kind by increasing the principal amount of the convertible notes outstanding. The notes will be convertible into the common stock of Cheniere at an initial conversion price of $93.64, which represents 130% of the closing price of the common stock of Cheniere on Nov. 10, 2014.
"RRJ is making a substantial investment in Cheniere in connection with our Corpus Christi liquefaction project. RRJ was a significant equity investor in our Sabine Pass liquefaction project and we look forward to working with them again," said Charif Souki, chairman and CEO of Cheniere. "This investment satisfies a portion of the equity needed to finance the Corpus Christi liquefaction project. We continue to make progress on the project and expect to commence construction in early 2015."
Closing is expected to occur Nov. 28, 2014, subject to customary closing conditions.
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