China Merchants Bank contributes $95 million USD to a $2.62 billion USD syndicated loan to Cheniere Energy for the Corpus Christi Liquefaction 2020 Refinancing Project

Project narrative

On June 18, 2020, a syndicate of 18 banks — including the New York Branch of China Merchants Bank Co., Ltd. — entered into a $2,620,000,000 USD syndicated delayed draw term loan agreement with 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 the Corpus Christi Liquefaction 2020 Refinancing Project. The loan carried a maturity period of three years and a final maturity date of June 18, 2023. The loan carried an interest rate at a variable rate per annum equal to LIBOR or the base rate plus the applicable margin. The applicable margin for LIBOR loans ranged 2.00% to 2.75% per annum for the first year of the loan, then to 2.50% to 3.25% per annum for the second, and then 3.00% to 3.75% per annum to maturity. The applicable margin for base rate loans ranged from 1.00% to 1.75% per annum for the first year of the loan, 1.50% to 2.25% per annum for the second, and 2.00% to 2.75% per annum to maturity. The margin was dependent on the credit ratings assigned to borrowings under the loan. Interest on LIBOR loans was due and payable at the end of each LIBOR period, and interest on base rate loans was due and payable at the end of each calendar quarter. The borrower was obligated to pay a commitment fee on the average daily amount of undrawn commitments at a rate equal to 30% multiplied by the applicable margin for LIBOR loans then in effect. The borrower also had to pay duration fees on, and subject to the occurrence of, the first anniversary of the loan signing, in an amount equal to 0.25% multiplied by the aggregate amount of commitments as of the earlier to occur of the date that loans were first borrowed or 45 days after signing; at the second anniversary of the loan signing, the borrower had to pay an amount equal to 0.50% multiplied by the aggregate amount of commitments at the payment date. The loan also featured administrative agents. The term loan contained a financial covenant requiring to the borrower to maintain a leverage ratio not exceeding 5.75:1.00 at any time that outstanding loans under its term loan and its revolving credit facility exceed 30% of the aggregate amount of outstanding loans under the term loan plus remaining undrawn commitments thereunder and commitments under the revolving credit facility. Furthermore, beginning with the first full fiscal quarter ended after the later of December 30, 2021 and the guaranteed substantial completion date for Train 3 of the Corpus Christi LNG terminal, the borrower could not permit the twelve-month historical debt service coverage ratio and the twelve-month projected debt service coverage ratio as of the end of any fiscal quarter to be less than 1.15 to 1.00. The loan was secured by (i.e. collateralized against) a first priority security interest in substantially all of the assets of Cheniere Energy, including the equity interests in Cheniere Energy's direct subsidiaries (other than certain excluded subsidiaries). Upon repayment in full of the outstanding obligations under the Amended and Restated Note Purchase Agreement, dated as of March 1, 2015, entered into by CCH HoldCo II, the Bank of New York Mellon, and EIG Management LLC, the equity interests in Cheniere CCH HoldCo II, LLC would be pledged as collateral to secure the obligations under the term loan. China Merchants Bank contributed $95.00 million USD to the loan syndicate. In addition to China Merchants Bank, the following lenders contributed to the loan syndicate: Bank of America, N.A. ($100.00 million USD), the New York Branch of Canadian Imperial Bank of Commerce (CIBC) ($150.00 million USD), Crédit Agricole Corporate and Investment Bank (CACIB) ($150.00 million USD), the Cayman Islands Branch of Credit Suisse AG ($100.00 million USD), Goldman Sachs Bank USA ($100.00 million USD), HSBC Bank USA, National Association ($150.00 million USD), ING Capital LLC ($200.00 million USD), JPMorgan Chase Bank, N.A. ($150.00 million USD), Mizuho Bank, Ltd. ($150.00 million USD), Morgan Stanley Bank, N.A. ($150.00 million USD), MUFG Bank, Ltd. ($200.00 million USD), National Australia Bank Limited (NAB) ($75.00 million USD), New York Branch of Natixis ($150.00 million USD), Royal Bank of Canada (RBC) ($150.00 million USD), Santander Bank, N.A. ($150.00 million USD), Société Générale S.A. (SocGen) ($200.00 million USD), and Sumitomo Mitsui Banking Corporation ($200.00 million USD). SocGen served as administrative agent. SocGen, ING Capital, Mizuho Bank, MUFG Bank, the New York Branch of Natixis, RBC, Santander Bank, and SMBC served as joint lead arrangers. The proceeds were to be used by the borrower to repay the existing 11.0% Convertible Senior Secured Notes due 2025 issued by Cheniere CCH HoldCo II, LLC pursuant to the Amended and Restated Note Purchase Agreement, dated as of March 1, 2015 with the Bank of New York Mellon and EIG Management LLC, to repay and/or repurchase the 4.875% Convertible PIK Notes due 2021 issued by Cheniere Energy, and to pay related fees and expenses. The refinanced debt was originally used to finance the Corpus Christi Liquefaction Project, which was a greenfield liquefied natural gas (LNG) project that was initially 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.