New Issue: Chesapeake Energy sells $600 million 6 3/8% notes at 99.056 to yield 6½%

By Paul A. Harris

St. Louis, Dec. 1 - Chesapeake Energy Corp. sold $600 million of senior notes due June 15, 2015 (Ba3/BB-/BB) at 99.056 with a 6 3/8% coupon on Wednesday to yield 6½%, according to a syndicate source.

Price talk was 6½% to 6 5/8%.

Deutsche Bank Securities, Banc of America Securities LLC, Credit Suisse First Boston, Lehman Brothers and UBS Investment Bank ran the books for the Rule 144A issue. Citigroup was a co-manager.

Proceeds will be used to fund the acquisition of Hallwood Energy Corp., as well as to redeem Chesapeake Energy's existing 8 3/8% senior notes and repay its revolver.

The issuer is an Oklahoma City-based independent natural gas producer.

Issuer:	Chesapeake Energy Corp.
Amount:	$600 million
Maturity:	June 15, 2015
Security description:	Senior notes
Bookrunners:	Deutsche Bank Securities, Banc of America Securities LLC, Credit Suisse First Boston, Lehman Brothers, UBS Investment Bank
Co-manager:	Citigroup
Coupon:	6 3/8%
Price:	99.056
Yield:	6½%
Spread:	214 basis points
Call features:	Callable after five years at 103.188, 102.125, 101.063, 100.0
Equity clawback:	For the first three years for 35% at 106.375
Pricing date:	Dec. 1
Settlement date:	Dec. 8
Ratings:	Moody's: Ba3
	Standard & Poor's: BB-
	Fitch: BB
Price talk:	6½%-6 5/8%

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