Chesapeake Energy Corporation (NYSE:CHK) today announced it has entered
into a $3.0 billion unsecured loan from Goldman Sachs Bank USA and
affiliates of Jefferies Group, Inc. The net proceeds of the loan, after
payment of customary fees and original issue discount (if any), will be
utilized to repay borrowings under the company’s existing corporate
revolving credit facility.
The new facility, which ranks pari passu to Chesapeake’s outstanding
senior notes, matures on December 2, 2017 and may be repaid at any time
this year without penalty at par value and carries an initial variable
annual interest rate through December 31, 2012 of LIBOR plus 7.0%, which
is currently 8.5%, given the 1.5% LIBOR floor in the loan agreement.
During the remainder of the year, Chesapeake plans to complete asset
sales totaling $9.0-$11.5 billion and intends to use a portion of the
proceeds from these asset sales to repay the loan. Chesapeake has
received strong interest from prospective buyers of its Permian Basin
asset sales process and its Mississippi Lime joint venture process, and
the company expects to complete these two transactions in the 2012 third
Aubrey K. McClendon, Chairman and Chief Executive Officer, said, “This
short-term loan from Goldman and Jefferies provides us with significant
additional financial flexibility as we execute our asset sales during
the remainder of 2012.
As previously announced, Chesapeake’s business strategy is evolving in
2012 from the unconventional resource play identification and leasehold
capture strategy of the past seven years to a strategy now focused
exclusively on developing the 10 core plays in which we have built a #1
or #2 position and on continuing our transition from natural gas to
liquids, reducing capital expenditures and paying down long-term debt.
We believe Chesapeake has built the nation’s best collection of E&P
assets, and we are 100% committed to delivering on the very substantial
growth and value embedded in these assets for our shareholders through a
relentless focus on developing our 10 core plays.”
Conference Call Information
A conference call to discuss this release and our quarterly filing on
Form 10-Q has been scheduled for Monday, May 14, 2012 at 8:30 am EDT.
The telephone number to access the conference call is 913-312-0956
or toll-free 888-263-2744. The passcode for the call is 3455479.