RRJ, Temasek in $1bn US energy deal

Cheniere Energy will issue $1bn of convertible notes to the Asia-based investors

Hong Kong-based RRJ Capital has purchased $1 billion worth of convertible notes issued by Houston-based energy company Cheniere Energy, reserving the right to transfer a portion to Singaporean sovereign wealth fund Temasek, according to a statement.

Proceeds from the investment will fund a portion of the costs of developing, constructing and placing into service the Corpus Christi liquefaction project, which intends to develop liquefaction facilities near Corpus Christi. Cheniere is primarily engaged in liquefied natural gas-related projects.

The convertible notes will have a maturity of six-and-a-half years, and accrue interest at a rate of 4.875 percent per annum, payable by increasing the principal amount of the convertible notes outstanding, according to the terms of the deal.

The notes will be convertible into common stock of Cheniere at an initial conversion price of $93.64, representing 130 percent of Cheniere’s closing price on 10 November 2014, the day before the deal was announced in the US.

RRJ has teamed up with Temasek to invest in Cheniere before, selling its stake in the business in August last year having invested a combined $468 million in 2012. Those proceeds went towards buying $500 million of the $2 billion of equity securities to be issued by Cheniere Energy Partners LP to help fund its Sabine Pass LNG liquefaction project in Louisiana.

The latest deal will close in late November subject to customary closing conditions.

“We are pleased to have this opportunity to deepen our involvement in Cheniere. We first invested in Cheniere's LNG business in May 2012 and have been happy with the company's performance to date,” Richard Ong, chairman and chief executive of RRJ, said in a statement.

His brother Charles Ong, who is co-chairman and co-chief executive of RRJ, added, “This investment highlights our long term commitment to Cheniere and is consistent with our long term view about LNG as a clean energy source, and Cheniere's strong position in that sector.”

RRJ Capital is a Hong Kong-based private equity firm founded in 2011 by Richard Ong, one of the three co-founders of Hopu Investment Management. In 2012, the firm raised $5 billion for its second private equity fund. The fund has close ties to the $177 billion sovereign wealth fund, Temasek Holdings, where Charles Ong had previously held a series of management positions. The firms joined together earlier this year to invest €1.3 billion in the Japan and Europe operations of Dutch insurance company ING Group.