Chesapeake Energy launches exchange offer for five series of notes

By Sarah Lizee

Olympia, Wash., Dec. 4 – Chesapeake Energy Corp. launched private offers of up to $1.5 billion of its new 11½% senior secured second-lien notes due 2025 in exchange for some of its outstanding senior notes, according to a notice.

The company said it may increase the cap but does not expect to increase it to an amount greater than $2.34 billion, if at all.

The exchange offers are conditioned on sufficient existing notes being tendered so that at least $1.5 billion of new second-lien notes will be issued.

The following existing notes are covered by the exchange offers, listed in order of acceptance priority level, with the total consideration listed per $1,000 principal amount:

• $1.09 billion of 8% senior notes due 2027 for $700 of new notes;

• $918,514,000 of 8% senior notes due 2026 for $700 of new notes;

• $1,244,498,000 of 8% senior notes due 2025 for $700 of new notes;

• $400 million of 7½% senior notes due 2026 for $620 of new notes; and

• $850 million of 7% senior notes due 2024 for $620 of new notes.

The total consideration includes an early tender premium of $50.00 per $1,000 principal amount. Holders who tender their notes by 5 p.m. ET on Dec. 17 will be eligible to receive the early tender premium.

All existing notes that are tendered for exchange at or prior to the early tender date will have priority over existing notes that are tendered for exchange after the early tender date, even if the existing notes tendered after the early tender date have a higher acceptance priority level.

As of Dec. 4, eligible holders representing about $723 million, or about 79%, of the 8% senior notes due 2026 and about $262 million, or about 25%, of the 8% senior notes due 2027 have committed to tender their existing notes in the applicable exchange offer at or prior to the applicable early tender date.

The exchange offers will expire at 11:59 p.m. ET on Jan. 2.

The final settlement date is expected to occur on Jan. 6.

The company may elect to settle an exchange offer for any or all series of existing notes early. An early settlement date, if any, would not be expected to occur earlier than Dec. 19.

Holders will also receive accrued interest.

Tenders may be validly withdrawn at any time at or prior to the early tender date, but not after.

The exchange offers are being made in connection with a concurrent secured term loan financing and a concurrent cash tender offer and consent solicitation for its 6 7/8% senior notes due 2025 issued by Brazos Valley Longhorn, LLC and Brazos Valley Longhorn Finance Corp.

The exchange offers are not conditioned upon the completion of the concurrent transactions.

Global Bondholder Services Corp. (866 470-4300 toll-free or 212 430-3774 collect for banks and brokers) is the information agent and depositary for the exchange offers.

The natural gas producer is based in Oklahoma City.

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