This excerpt taken from the LNG 10-K filed Feb 27, 2007.
In November 2006, we consummated a private offering of Senior Notes. The Senior Notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and in offshore transactions to non-United States persons in reliance on Regulation S under the Securities Act. At closing, net proceeds of approximately $2.0 billion, net of commissions, from the offering
CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
were used as follows: approximately $380 million to repay borrowings under, and replace, the Sabine Pass Credit Facility; approximately $380 million to repay the Term Loan; $335.0 million to fund a reserve account for scheduled interest payments on the Senior Notes through May 2009; and approximately $18 million to terminate the interest rate swaps and for other expenses. The remaining approximately $887 million of net proceeds from the offering will be used to fund the remaining costs to complete Phase 1 and Phase 2 Stage 1 of the Sabine Pass LNG receiving terminal.
We may redeem some or all of the Senior Notes at a redemption price equal to 100% of the principal amount plus a make-whole premium, plus accrued and unpaid interest and additional interest, if any, to the redemption date. Until November 30, 2009, we may redeem up to 35% of the aggregate principal amount of the 2013 Notes and up to 35% of the aggregate principal amount of the 2016 Notes with the net cash proceeds of one or more equity offerings by us with the proceeds that we retain or that are contributed to us, as applicable, at par plus a premium equal to the coupon, plus accrued and unpaid interest and additional interest, if any, as long as at least 65% of the aggregate principal amount of the 2013 Notes and the 2016 Notes, respectively, remain outstanding immediately after such optional redemption and such optional redemption occurs within 90 days of the date of the closing of such equity offering.
Under the indenture governing the Senior Notes, except for certain permitted tax distributions, we may not make distributions until certain conditions are satisfied. The indenture requires that we apply our net operating cash flow (i) first, to fund with monthly deposits our next semiannual payment of approximately $75.5 million of interest on the Senior Notes, and (ii) second, to fund a one-time, permanent debt service reserve fund equal to one semiannual interest payment of approximately $75.5 million on the Senior Notes. Distributions will be permitted only after Phase 1 Target Completion, as defined in the indenture governing the Senior Notes, or such earlier date as project revenues are received, upon satisfaction of the foregoing funding requirements, after satisfying a fixed charge coverage ratio test of 2:1 and after satisfying other conditions specified in the indenture.
Total interest expense recognized for the year ended December 31, 2006 was $22.4 million before interest capitalization of $7.6 million.