Chesapeake Energy $250 million convertible preferreds talked to yield 4.5%-5%, up 30%-35%

By Rebecca Melvin

Princeton, N.J., Sept. 7 - Chesapeake Energy Corp. is expected to price $250 million of convertible preferreds on Thursday after the markets close, a syndicate source said.

The cumulative convertible preferred stock with a liquidation preference of $100 per share is being priced concurrently with a public offering of 8 million shares of its common stock.

Price talk on the preferred deal was seen at a dividend of 4.5% to 5% and an initial conversion premium of 30% to 35%.

Joint bookrunning managers are Lehman Brothers, Banc of America Securities LLC, Credit Suisse First Boston, Morgan Stanley and Wachovia Securities.

The offering is being made under the company's existing shelf registration statement; and there is an over-allotment option for up to $37.5 million in additional shares.

Chesapeake intends to use the net proceeds of the offering, together with the proceeds from the common stock offering, to repay debt under its bank credit facility or for general corporate purposes.

Oklahoma City-based Chesapeake is an oil and natural gas producer.

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