Chaparral Energy to use some IPO proceeds to repay debt

By Ted A. Knutson

Washington, Dec. 29 - Chaparral Energy, Inc. said Thursday it plans to use an unspecified sum from its newly announced $139 million net initial public offering to repay debt and for general corporate purposes.

As of Sept. 30, the Oklahoma City-based energy company had $243.5 million outstanding under its restated credit agreement. Interest rates on about $208.5 million and $9.0 million were based on Libor with effective rates of 5.88% and 5.81%, respectively.

In addition on that date, the company had $26.0 million outstanding bearing interest at Prime rate plus a margin with an effective rate of 7.25%.

On Oct. 5, this amount was converted to a Libor loan with interest at 5.94%.

On Dec. 1, Chaparral issued $325 million principal amount of 8½% senior notes and used a portion of the proceeds from the offering of these notes to repay about $184.0 million of the outstanding debt under the credit agreement.

The move reduced the borrowing base under the restated credit agreement to $172.5 million from $270.0 million.

JP Morgan is the lead underwriter with participation from Banc of America Securities LLC, Lehman Brothers, Comerica Securities and Fortis Securities.

In addition to share sales by the company, selling shareholders will be selling an undisclosed amount of stock in the IPO.

The announcement was made in an S-1 registration with the Securities and Exchange Commission.

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