Singapore investment company Temasek Holdings and private equity firm RRJ Capital are investing a further US$1 billion (S$1.3 billion) in American energy company Cheniere Energy.
Cheniere is building the first liquefied natural gas (LNG) export terminal in the United States at Sabine Pass in Texas, as it rides the nation's shale gas boom.
Back in 2012, the two investment firms were "significant equity investors" in Cheniere's Sabine Pass liquefaction project, RRJ noted in a statement yesterday.
In recent years, extracting LNG trapped in shale rock formations has become a major new source of energy in the US.
It is understood that Temasek is not the majority partner in this transaction.
Cheniere, based in Houston, Texas, is primarily engaged in LNG-related businesses. It owns and operates the Sabine Pass LNG terminal and Creole Trail Pipeline in Louisiana.
This time, Temasek and RRJ, which has offices in Singapore and Hong Kong, will make an investment by purchasing unsecured convertible notes - a type of debt - issued by Cheniere.
Proceeds from the convertible notes will be used to fund a portion of the costs of developing, constructing and placing into service its Corpus Christi liquefaction project, related pipeline infrastructure and general corporate purposes.
The notes have a maturity of 6½ years, and accrue interest at a rate of 4.875 per cent a year, which is payable in kind. That means the interest will be paid in additional bonds rather than in cash. The notes will be convertible into common stock of Cheniere in various circumstances, including at the option of the note holders after the first anniversary of the closing date.
The notes will close on Nov 28.
This can be done at an initial conversion price of 130 per cent of the closing price of Cheniere's common stock on Monday.
Cheniere has agreed to use its "best reasonable endeavours" to register the notes with the US Securities and Exchange Commission such that they will be freely tradable after the first anniversary of the closing date, RRJ's statement said.
RRJ chairman and chief executive Richard Ong added: "We are excited to be investing in Cheniere, alongside Temasek, again. This investment in Cheniere's Corpus Christi LNG project is RRJ's fourth investment with the Cheniere group of companies and highlights RRJ's focus on key strategic energy infrastructure assets which are cost competitive globally."
RRJ manages two funds with a total size of US$5.9 billion invested in companies in China, North America and Europe.
The investment firm's portfolio focuses on energy, financial institutions, consumer, food and environmental services.
In May, Temasek joined RRJ and another Asia-based investment firm, Seatown Holdings International, to invest €1.28 billion (S$2 billion) in insurance firm NN Group, a unit of Dutch bank ING.
This article was first published on November 12, 2014.
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