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How Cheniere Energy Is Placed for the Rest of 2017 and Beyond

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Part 6
How Cheniere Energy Is Placed for the Rest of 2017 and Beyond PART 6 OF 10

Cheniere Energy’s Bad Balance Sheet Position Is a Major Concern

Cheniere Energy’s outstanding debt

Cheniere Energy’s (LNG) total outstanding debt was $24.1 billion at the end of 1Q17, $2.3 billion higher than its total outstanding debt at the end of 2016. 

This total debt included $16.0 billion worth of debt sitting on Cheniere Energy Partners’ (CQP) balance sheet.

Cheniere Energy’s Bad Balance Sheet Position Is a Major Concern

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The above graph shows the gradual rise in Cheniere’s debt in recent quarters. The company’s high leverage has remained a major concern for its investors considering its low cash flows and huge outstanding debt. The company expects to incur $1.4 billion in interest expenses on a run-rate basis following its completion of seven trains.

Cheniere Energy and Cheniere Energy Partners are exploring measures to move their debt up from the project level to the company level as part of what they deem a “long-term capital structure plan.” 

According to a recent investor presentation by Cheniere, “This framework provides CEI significant free cash flow to invest and grow which can further defer substantial debt pay down, while at the same time returning capital to shareholders via share repurchases and/or dividends.”

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