RRJ to Invest $1 bln in U.S. LNG Project

Asian buyout firm RRJ Capital has increased its bet on the U.S liquefied natural gas (LNG) sector by agreeing to invest about $1 billion in convertible notes issued by Cheniere Energy Inc, the companies said in a statement on Tuesday.

Hong Kong-based RRJ has the option to transfer part of the notes to Temasek Holdings, the statement said. The Singapore state investor is expected to take a "significant minority amount" of the $1 billion notes by the end of November, a person with direct knowledge of the deal told Reuters. The source declined to be identified as details of the Temasek investment are not public. Temasek declined to comment.

RRJ and Temasek first agreed to buy a 19.8 percent stake in Cheniere in May 2012, to help the U.S. energy company fund the country's first LNG export facility at Sabine Pass, Louisiana.

A sharp rise in Cheniere Energy shares encouraged Temasek to sell its holding last year.

The notes, with a six and a half year maturity offering 4.875 percent per annum interest rate, will convert into Cheniere's common stock at a price of $93.64, or 130 percent above Cheniere's closing price on Monday.

Proceeds will be partly used to fund Cheniere's Corpus Christi liquefaction project, which is being designed for up to three production plants, with a total expected annual output of about 13.5 million tonnes each year.

Houston-based Cheniere expects to start building the plant early next year.

Temasek set up its energy investment unit Pavilion Energy in April last year to exploit growing demand for LNG in Asia.

Temasek's Pavilion is also involved in east African LNG projects in Tanzania, and has LNG supply deals with France's Total.

(By Denny Thomas, Additional reporting by Oleg Vukmanovic, editing by Louise Heavens)