Ann: LNG Ltd Plans Dual Listing in USA, page-26

I must confess I am a little confused by the annoucement.

Typically in a dual listing as seen in Rio and BHP you have one established Australian company (eg BHP) and another on a foreign exchange (eg Biliton). Rather than merge these companies into a single company (and therefore triggering potential capital gains tax) they continue to operate as two listed vehicles with liabilties and income shared between the two of them therefore creating one single economic entity. There are other issues (eg retaining the ability to pay franked dividends on Australian income) that make a dual listing sensible.

In the announcement today they said that LNG Limited (i.e. the current Australian entity would list on an American stock exchange). This would be as Siv as pointed out a cross listing (i.e. one legal entity being listed on two exchanges). Could just be a case of semantics but confusing to me none the less.

In a true dual listing you would create a new US entity (say LNG Inc.). This would then raise capital through an IPO. I would think this cash would be used for two potential sources:

1) funding Maggy Stage 2 (i.e. from my reading of the Stonepeak equity agreement have only committed equity funding for Stage 1- raising capital through a listing may mean that LNG retain 100% of trains 3 and 4 by providing all of the equity funding (rest funded by project debt). Can someone please correct my understanding if this is wrong.

2) Bear Head. We have always wondered how LNG would fund the equity commitment- it might be we still find a equity partner but we can still retain more of the project.

The timing of listing just after construction start to me makes me think the above reasoning is clearly in play because this is when you would need to fund Maggy Stage 2 construction and Bear Head.

Overall it makes sense if you are raising fresh capital to do it through a dual listed newly formed US company. Some US insto and retail managers may not bother with a cross listed Australian company either due to fund investment restrictions or complexity. We know America has the deepest capital markets in the world and big insto support for US LNG projects as seen in the success of the Dominion IPO and Cheniere and Kindle to just name a few. It makes logical sense therefore that a big fresh issue of capital would be less expensive in the US as opposed to a fresh issue of capital out of LNG Limited. Im sure its these considerations that the Board has considered in putting this proposal forward. I guess we will get further detail in time and Im assuming here that it is a true dual listing they are proposing.

Further, a Board considering options for future capital funding is probably not a Board that thinks BTAs and FID wont be reached. Another hint or clue perhaps that all is still on track.

Another clue is that the Board have said they are still looking at options at the asset level. To me this may be a potential flicking of Magnolia into a MLP structure which could also be another option to raise equity for Maggy Trains 3 and 4 at 18X P/E multiples.