Cheniere Energy seeks to borrow about $2.6 billion to refinance its underused Sabine Pass liquefied natural gas import facility in Louisiana and a pipeline, four people familiar with the deal tell Bloomberg.
Cheniere, which is on track to export the first cargo of U.S. shale gas this year, owes about $2.1 billion on the import facility, with $1.67 billion due in November, according to a company presentation made on Thursday.
Thanks to the U.S. shale boom, the $1.6 billion Sabine Pass import terminal was redundant the moment it came online in 2009. U.S. gas production is expected to climb in 2016 for the 11th straight year, and futures that soared to more than $13 per million British thermal units in mid-2008 plunged in December to a 16-year low of $1.68. The plant has never operated at full capacity, and soon after it began operations the company started planning an adjacent export facility.
Cheniere has hired Societe Generale SA as adviser and Mitsubishi UFJ Financial Group Inc. as the lead arranger, according to the Bloomberg sources, who asked not to be identified because they’re not authorized to discuss the deal.
“It’s a sensitive issue, but Sabine’s contracts are with investment grade A quality paper, so they have high-quality sales and purchase agreements providing the cash flow to support the debt,” Ted Michael, a Genscape Inc. LNG analyst, tells Bloomberg. “I imagine the market is concerned at the moment, but for the debt markets, I assume it is within the parameters they can bear.”
The financing would replace all existing debt on the Creole Trail Pipeline and the LNG import terminal, and add some new debt. Spokesmen for Houston-based Cheniere, Mitsubishi UFJ and Societe Generale did not respond to request for comment from Bloomberg, which has the full story.
As reported by Bloomberg earlier this month, Cheniere Energy plans to export the first liquefied natural gas cargo from Sabine Pass in late February or early March, a delay from the previous estimate of late January.
