There are two upcoming situations in which additional cash will be needed by CQP. Cheniere does not plan to issue additional common units for either of them.
One is in November 2013 when $550 million in senior notes will mature. The plan is to roll this over into other senior notes. A secondary offer of additional common units could be used as a last resort, but the expectation is that new senior notes will be used.
The other is the equity portion of the funding for trains 3 and 4. Rather than issue more common units, the plan is to raise this by selling subordinated units to private equity, similar to the current arrangement with Blackstone.
When I first posted this topic in early January, it was based on what I was told by CQP Investor Relations at that time. I was told they would seek a private equity deal. They indicated that it would be somewhat like the Blackstone deal, but they hoped to get a better deal this time.
This IS a private equity deal. RRJ Capital is an Asian investment firm which focuses on private equity investments in China and South-East Asia. I think GSO Capital is a subsidiary of Blackstone. The main difference between this deal and the previous one is that common units are being issued now rather than subordinated units that would convert to common units later.
Of course current investors hate to have a secondary, but money has to be raised to construct trains 3 & 4. This appears to be a much better private equity deal than the previous one and it is much much better to place these units in large blocks with institutional investors than to suffer the price-drop consequences of placing 17.6 million units on the market.
I don't know what effect this will have in the next few days, but long term I think this remains a strong buy.