China Merchants Bank contributes $57.6 million USD to a $6.1374 billion USD syndicated loan for Train 3 of the Corpus Christi Liquefaction Project (Linked to Record ID#107192 and #107195)

Project narrative

On May 22, 2018, a syndicate of 45 banks — including the New York Branch of the Bank of China (BOC), the New York Branch of China Merchants Bank Co., Ltd., and the New York Branch of the Industrial and Commercial Bank of China (ICBC) — entered into a $6,137,411,725.48 USD syndicated term loan facility agreement with Cheniere Corpus Christi Holdings, LLC — a Delaware-incorporated special purpose vehicle (SPV) wholly-owned by Delaware-incorporated SPV Cheniere CCH HoldCo I, LLC, itself wholly owned by Cheniere Energy, Inc., a Delaware-incorporated American liquefied natural gas (LNG) company and major exporter headquartered in Houston, Texas and listed on NYSE American — for Train 3 of the Corpus Christi Liquefaction Project. This term loan facility consisted of two tranches: $2,801,737,202.53 USD Tranche 1 and $3,335,674,522.95 USD Tranche 2, with Tranche 1 to be used before Tranche 2 could be drawn. This term loan facility carried a maturity period of six years and one month (approximately 6.112 years) and a final maturity date of June 30, 2024, with a repayment schedule of quarterly installments beginning on the earlier of 1) the first quarterly payment date three months following project completion or 2) a set date determined by reference to the date under which a certain LNG buyer linked to the last train to become operational was entitled to terminate its sale and purchase agreement (SPA) for failure to achieve the date of first commercial delivery for that agreement. Scheduled amortization would be based upon a 19-year tailored amortization, commencing the first full quarter after the project completion and designed to achieve a minimum projected fixed debt service coverage ratio of 1.50x. There were mandatory repayments under customary circumstances. Borrowings under the term loan facility carried a variable interest rate per annum based on LIBOR or an alternate base rate based on the agent's prime rate plus an applicable margin of 1.75% for LIBOR loans and 0.75% for base rate loans. Interest on LIBOR loans was due and payable at the end of each applicable interest period, while interest on base rate loans was due and payable at the end of each calendar quarter. The facility included certain upfront fees to the agents and lenders, administrative fees to the agents, and a commitment fee calculated at a rate per annum equal to 40% of the margin for LIBOR loans (0.7%), multiplied by the outstanding debt commitments. Corpus Christi Liquefaction, LLC (CCL), Cheniere Corpus Christi Pipeline, L.P. (CCP), and Corpus Christi Pipeline GP, LLC (CCP GP) — three Delaware-incorporated SPVs all indirectly or directly wholly owned by Cheniere Corpus Christi Holdings, LLC — issued guarantees for this facility. Loans under the term loan facility were secured (i.e. collateralized) under the Amended and Restated Common Security and Account Agreement dated as of May 22, 2018 by Cheniere Corpus Christi Holdings, CCL, CCP, and CPP GP, with Société Générale as security trustee and Mizuho Bank as account bank; the collateral included a first priority lien in substantially all of the assets of Cheniere Corpus Christi Holdings, CCL, CCP, and CPP GP, a pledge of all the equity interests in CCL, CCP, and CCP GP and a mortgage over the real property of CCL and CCP. The common security and account agreement also required Cheniere Corpus Christi Holdings to establish and maintain certain deposit accounts, subject to the control of the security trustee. The term loan was furthered secured under Amended and Restated Holdco Pledge Agreement dated May 22, 2018, among Cheniere CCH HoldCo I, LLC and Société Générale, where Cheniere CCH HoldCo I pledged its equity interest in Cheniere Corpus Christi Holdings as security. On May 22, 2018, Cheniere Corpus Christi Holdings, and CCL, CCP, CCP GP (as Guarantors) also entered into the Amended and Restated Common Terms Agreement Société Générale as facility agent and intercreditor agent and Scotiabank as working capital facility agent. The facility included customary representations and affirmative and negative covenants for project finance facilities, including compliance with laws; conditions to the making of restricted payments, including distributions (subject to other conditions); maintenance of minimum insurance; maintenance of material project agreements; limitations on indebtedness, guarantees, liens and investments; maintenance of certain interest rate hedging arrangements; maintenance of a historical debt service coverage ratio of 1.15x; and maintenance of and compliance with various permits. The borrower was permitted to incur additional senior secured or unsecured indebtedness consisting of working capital debt, replacement senior debt, permitted development expenditures senior debt and expansion senior debt, so long as, among other requirements, there was no event of default or unmatured event of default and the updated base case forecast demonstrated a fixed projected debt service coverage ratio of 1.40x (for replacement senior debt) or 1.50x (for permitted development expenditures senior debt and expansion senior debt). The facility included customary events of default. BOC contributed $151.5 million USD, as captured by Record ID#107192. China Merchants Bank contributed $57.60 million USD, as captured by Record ID#107194. ICBC contributed $278.40 million USD, as captured by Record ID#107195. In addition to the three Chinese state-owned banks, the following lenders contributed the respective amounts to the loan syndicate: ABN AMRO Capital USA LLC ($137.10 million USD), Bank of America, N.A. ($273.10 million USD), the Houston Branch of The Bank of Nova Scotia (Scotiabank), the New York Branch of Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) ($175.10 million USD), Citibank, N.A. ($57.60 million USD), Commonwealth Bank of Australia (CBA) ($234.80 million USD), Crédit Agricole Corporate and Investment Bank (CACIB) ($175.10 million USD), the Cayman Islands Branch of Credit Suisse AG ($271.20 million USD), DBS Bank Ltd. ($97.30 million USD), Goldman Sachs Bank USA ($190.60 million USD), HSBC Bank USA, National Association ($143.50 million USD), ING Capital LLC ($273.10 million USD), the New York Branch of Intesa Sanpaolo S.P.A. ($273.10 million USD), JPMorgan Chase Bank, N.A. ($273.10 million USD), Lloyds Bank PLC ($273.10 million USD), Mizuho Bank, Ltd. ($273.10 million USD), Morgan Stanley Bank, N.A. and Morgan Stanley Senior Funding, Inc. (together $273.10 million USD), MUFG Bank, Ltd. ($256.30 million USD), Royal Bank of Canada (RBC) ($273.10 million USD), Santander Bank N.A. ($57.60 million USD), Société Générale S.A. (SocGen) ($232.80 million USD), Standard Chartered Bank plc ($160.20 million USD), Sumitomo Mitsui Banking Corporation (SMBC) ($301.80 million USD), CaixaBank, S.A. ($118.00 million USD), the New York Branch of Canadian Imperial Bank of Commerce (CIBC) ($36.00 million USD), The Korea Development Bank (KDB) and the New York Branch of KDB (together $51.50 million USD), the New York Branch of Landesbank Baden-Württemberg (LBBW) ($108.60 million USD), National Australia Bank Limited (NAB) ($28.80 million USD), Wells Fargo Bank, National Association ($48.70 million USD), Apple Bank for Savings ($13.60 million USD), the Miami Branch of Banco de Sabadell, S.A. ($55.70 million USD), CIT Finance LLC ($27.10 million USD), Crédit et Industriel et Commercial ($53.10 million USD), FirstBank Puerto Rico d/b/a FirstBank Florida ($21.80 million USD), KEB Hana Global Finance Limited ($8.60 million USD), KfW IPEX-Bank GmbH ($21.60 million USD), Raymond James Bank, N.A. ($24.20 million USD), Siemens Financial Services, Inc. (SFS) ($75.00 million USD), and the New York Agency of Woori Bank and Woori Global Markets Asia Limited (together $7.20 million USD. SocGen served as facility agent. CaixaBank, the New York Branch of CIBC, KDB, the New York Branch of LBBW, NAB, and Wells Fargo Bank served as mandated lead arrangers (though not in their individual capacities). ABN Amro Capital USA, Bank of America, the New York Branch of BOC, the Houston Branch of Scotiabank, the New York Branch of BBVA, China Merchants Bank, Citibank, CBA, CACIB, the Cayman Islands Branch of Credit Suisse, DBS Bank Ltd., Goldman Sachs Bank USA, HSBC Bank USA, the New York Branch of ICBC, ING Capital, the New York Branch of Intesa Sanpaolo, J.P Morgan Chase Bank, Lloyds Bank, Mizuho Bank, Morgan Stanley Senior Funding, MUFG Bank, RBC, Santander Bank, SocGen, Standard Chartered Bank, and SMBC served as joint bookrunners (though not in their individual capacities). ABN Amro Capital USA, Bank of America, the New York Branch of BOC, the Houston Branch of Scotiabank, the New York Branch of BBVA, China Merchants Bank, Citibank, CBA, CACIB, the Cayman Islands Branch of Credit Suisse, DBS Bank, Goldman Sachs Bank USA, HSBC Bank USA, the New York Branch of ICBC, ING Capital, the New York Branch of Intesa Sanpaolo, J.P Morgan Chase Bank, Lloyds Bank, Mizuho Bank, Morgan Stanley Senior Funding, MUFG Bank, RBC, Santander Bank, SocGen, Standard Chartered Bank, and SMBC served as joint lead arrangers (though not in their individual capacities). Because Cheniere Energy had established long-term relationships with many banks from previous large-scale financing, it did not formally appoint a mandated lead arranger for the transaction (though lenders still held this role). The loan was oversubscribed; banks only got 14% allocation of new commitments because of great interest to participate. On April 17, 2018 and on April 25, 2018, ABN Amro Capital USA, Apple Bank for Savings, Banco de Sabadell, Bank of America, the New York Branch of BOC, the Houston Branch of Scotiabank, the New York Branch of BBVA, CaixaBank S.A., the New York Branch of CIBC, China Merchants Bank, CIT Finance, Citibank, CBA, CACIB, CIC, the Cayman Islands Branch of Credit Suisse, DBS Bank, First Bank Puerto Rico, Goldman Sachs Bank USA, HSBC Bank USA, the New York Branch of ICBC, ING Capital, the New York Branch of Intesa Sanpaolo, J.P Morgan Chase Bank, KEB Hana Global Finance Limited, KfW IPEX-Bank GmbH, KDB, the New York Branch of KDB, the New York Branch of LBBW, Lloyds Bank, Mizuho Bank, Morgan Stanley Bank, Morgan Stanley Senior Funding, MUFG Bank, Raymond James Bank, RBC, Santander Bank, Siemens Financial Services, SocGen, Standard Chartered Bank, SMBC, Wells Fargo Bank, the New York Agency of Woori Bank, and Woori Global Markets Asia Limited issued a commitment letter (which had an addendum on April 25) to provide the loan. This term loan was an amendment-and-restatement of the $8,403,714,178.62 USD existing term loan facility dated May 13, 2015; it refinanced $4.8 billion USD loan under the loan which was used to finance the construction of Trains 1 and 2 of the Corpus Christi Liquefaction Project (that were still under construction at the time of the term loan) and to provide for further commitments to fund a portion of the cost of the development, construction, and operation of the Corpus Christi Liquefaction Project, including Trains 1, 2, and 3 and associated pipeline and other infrastructure at or near the project and for related business purposes; however, the funding of Train 3 was the primary purpose of the financing. The Corpus Christi Liquefaction Project was a greenfield liquefied natural gas (LNG) project initially planned as a three operational liquefaction train complex, each with a nominal production capacity of 4.5 million tons per annum (mtpa) of LNG (an aggregate nameplate capacity of 13.5 mtpa) and an export terminal with two docks/berths and three containment tanks each with the capacity to store 160,000 cubic meters of LNG situated 25 feet above sea level on a 1,000-acre plot on the La Quinta Ship Channel, along the north shore of Corpus Christi Bay in Corpus Christi, San Patricio County, Texas with 15 nautical miles from the coast the Gulf of Mexico, and an associated 22-mile, 48-inch 2.75 billion cubic feet per day (bcf/d) Corpus Christi Pipeline connecting the terminal to interstate and intrastate natural gas pipelines in Sinton, Texas. Stage 1 included two LNG trains, two tanks, one complete, and a second partial berth, while Stage 2 (Train 3) included one LNG train, one additional tank, and the completion of the second berth. The entire project had an estimated cost in 2013 of between $10.5 billion USD and $11.0 billion USD. In addition to the term loan facility, Cheniere Energy entered into an Amended and Restated Equity Contribution Agreement on May 22, 2018 with Cheniere Corpus Christi Holdings to increase its equity funding commitment for Train 3 by cash equity of up to $1.1 billion USD (to be made over all commitments on the term loan reached zero and that extent cash flows from the project were not enough to fund the project). The debt:to:equity ratio for Train 3 was around 80:20. In 2018, the Corpus Christi Liquefaction Project signed a 12-year sale and purchase agreement (SPA) with privately-owned commodities trading firm Trafigura Group and a 20-year SPA with PetroChina, the wholly-owned subsidiary of state-owned China National Petroleum Corporation for off-taking production from Train 3. Alongside various other LNG terminals under development and construction with it, the Corpus Christi Liquefaction Project was expected to enable the United States to become the third-largest LNG exporter in the world by 2020. This was the first financing of new LNG capacity to advance in the United States since 2015. Bechtel Oil, Gas and Chemicals, Inc. was the engineering, procurement and construction (EPC) contractor for Train 3 under a $2.4 billion USD contract. In June 2018, Baker Hughes won a contract from Bechtel to turbomachinery equipment, consisting of six PGT25+G4 DLE gas turbines driving various compressors, for Train 3. Bechtel used ConocoPhillips Optimized Cascade technology in the trains. On May 22, 2018, Cheniere Energy made a positive final investment decision (FID) for Train 3. On May 23, 2018, CCL issued a notice to proceed to Bechtel under the EPC contract to commence construction of Train 3. Train 3's first commissioning cargo was loaded on December 7, 2020, with commissioning at 97% completion. Train 3 was commissioned on March 26, 2021. The Corpus Christi Liquefaction Project has been the subject of local controversy. When lit, its flare releases hundreds of pounds of pollutants into the air such as volatile organic compounds, nitrogen oxides, carbon monoxide, and greenhouse gases like carbon dioxide and methane, according to Cheniere's incident reports with the Texas Commission on Environmental Quality (TCEQ), though TCEQ has never fined the project. Air quality concerns from the flare were the cause of concern, and planned expansion at the Corpus Christi Liquefaction, which would increase the permitted emission capacity, was seen as dangerous. In June 2021, Corpus Christi residents filed a contested case hearing with TCEQ to challenge the state permit, arguing that the flare caused respiratory illnesses to act up ad was harming local children. Moreover, residents alleged that emission events exceeding the permitted levels, and that Corpus Christi LNG did not use the most advanced available technologies to reduce air pollution. For its part, Cheniere constructed over $8 million USD of breakwater projects to minimize shoreline erosion and to protect sensitive wetlands nearby, while Bechtel and Cheniere worked with the National Hispanic Entrepreneurs’ Organization (NHEO) Institute to ensure equity by identifying and eliminating barriers among non-native English speaking workforce and to reduce eliminate hazards. On June 15, 2022, a syndicate of 36 banks — including the New York Branch of BOC and the New York Branch of ICBC — entered into an approximately $4,038,570,000 USD syndicated term loan facility agreement with Cheniere Corpus Christi Holdings, LLC for the Corpus Christi Stage 3 Liquefaction Project. This term loan was an amendment-and-restatement of the $6,137,411,725.48 USD existing term loan facility dated May 22, 2018it provided $3.8 billion USD in commitments incremental to the outstanding debt to fund approximately half of the total cost (approximately $8 billion USD) of the development, construction, and operation of the Stage 3 expansion of the Corpus Christi Liquefaction Project BOC contributed $152.76 million USD, as captured by Record ID#107254. ICBC contributed $92.30 million USD, as captured by Record ID#107275.