Published on 12/7/2016 in the Prospect News High Yield Daily.
New Issue: Chesapeake Energy sells upsized $1 billion 8% eight-year notes at 98.522 to yield 8¼%
By Paul A. Harris
Portland, Ore., Dec. 7 – Chesapeake Energy Corp. priced an upsized $1 billion issue of 8% eight-year senior notes (existing Caa3/confirmed CCC-) at 98.522 to yield 8¼% on Tuesday, according to market sources.
The issue size was increased from $750 million.
Price talk specified a yield of 8¼% with about 1.5 points of discount, so the deal essentially priced on top of talk.
Initial guidance had it pricing with a yield in the mid-8% context.
Deutsche Bank, BofA Merrill Lynch, Citigroup Global Markets Inc. and Wells Fargo Securities LLC were the joint bookrunners.
The Oklahoma City-based oil and gas producer plans to use the proceeds, together with cash on hand and borrowings under its revolving credit facility, to finance tender offers for certain of its senior notes announced Tuesday.
If the tender offers are not consummated or the proceeds from the new notes offer exceed the total consideration payable from the tender, Chesapeake intends to use the remaining proceeds for general corporate purposes, which may include debt repurchases and the repayment of its senior notes with near-term maturities as they become due.
| Issuer: | Chesapeake Energy Corp.
|
| Amount: | $1 billion, increased from $750 million
|
| Maturity: | Jan. 15, 2025
|
| Securities: | Senior notes
|
| Bookrunners: | Deutsche Bank Securities Inc., BofA Merrill Lynch, Citigroup Global Markets Inc., Wells Fargo Securities LLC
|
| Co-managers: | Barclays, BBVA Securities Inc., BNP Paribas Securities Corp., Credit Agricole CIB, DNB Markets, Goldman Sachs & Co., J.P. Morgan Securities LLC, Mizuho Securities USA Inc., MUFG, Morgan Stanley & Co. LLC, Natixis, Scotia Capital (USA) Inc.
|
| Coupon: | 8%
|
| Price: | 98.522
|
| Yield: | 8¼%
|
| Spread: | 592 bps
|
| Call: | Make-whole call until Jan. 15, 2020, then callable at 106
|
| Equity clawback: | 35% at 108 until Jan. 15, 2020
|
| Trade date: | Dec. 6
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| Settlement date: | Dec. 20
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| Ratings: | Moody's: Existing Caa3
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| S&P: CCC-
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| Distribution: | Rule 144A and Regulation S with registration rights
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| Price talk: | 8¼% including 1.5 points OID
|
| Marketing: | Quick to market
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