Chesapeake Energy receives early tenders of $377.1 million 8 1/8% notes in exchange

New York, Dec. 15 - Chesapeake Energy Corp. (Ba3/BB-) said it had received valid tenders of $377.1 million of its outstanding 8 1/8% senior notes due 2011 by the early tender deadline (5 p.m. ET on Dec. 12) of its previously announced offer to exchange new debt for up to $500 million principal amount of the 8 1/8% notes.

Chesapeake is giving holders of the 8 1/8% notes a choice of two different kinds of notes they might want to receive in exchange for their existing notes. As of the early tender deadline, $125.2 million of the 8 1/8% notes had been tendered in exchange for new 7¾% senior notes due 2015, while $251.8 million of the notes had been tendered in exchange for new 6 7/8% senior notes due 2016.

The company pointed out that holders who tendered their notes by the early tender deadline would be eligible to receive the $10 cash per $1,000 principal amount consent payment in addition to the new notes; notes tendered after that deadline would not be eligible for the consent payment.

Notes tendered under the terms of the offer may no longer be withdrawn.

The exchange offer will remain open until midnight ET on Dec. 29, subject to possible extension. Payment for all validly tendered notes accepted for payment is expected to be made on Dec. 31.

As previously announced, Chesapeake Energy, an Oklahoma City-based independent natural gas producer, said on Nov. 11 that it was considering offering to exchange senior notes issued in one or more series maturing after 2011 for up to $500 million of the existing 8 1/8% notes.

On Dec. 1, Chesapeake said it would offer to exchange new debt for the 8 1/8% notes, with holders having the option to select to receive either new 7¾% senior notes due 2015 or new 6 7/8% senior notes due 2016.

Specifically, Chesapeake said it would offer to issue $1,033.23 in principal amount of 7¾% notes or $1,107.68 in principal amount of 6 7/8% notes for each $1,000 principal amount of the 8 1/8% notes tendered by holders and accepted by the company for purchase. Accrued and unpaid interest due on all 8 1/8% notes accepted by the company would be settled by adjusting the principal amount of 7¾% and/or 6 7/8% notes to be issued.

Chesapeake set 5 p.m. ET on Dec. 12 as the now-expired early tender deadline and said that the exchange offer would expire at midnight ET on Dec. 29, with both deadlines subject to possible extension.

Chesapeake said that in addition to its issuance of the new notes in the exchange it would offer an early tender payment of $10 cash per $1,000 principal amount of the 8 1/8% notes validly tendered by the early tender deadline and accepted for purchase by the company.

It said that holders would not have to choose the same option for all the 2011 notes they tender. If more than $500 million principal amount of the 2011 notes is validly tendered and not withdrawn, the company said it would accept tenders from holders on a pro rata basis.

The 7¾% notes to be issued in the offer will be issued as additional notes of the same series as Chesapeake's already outstanding 7¾% senior notes due 2015, which were originally issued on Dec. 20, 2002. Currently $236.7 million principal amount is outstanding.

The 6 7/8% notes to be issued in the offer will be issued as additional notes of the same series as the company's already outstanding 6 7/8% senior notes due 2016, $200 million of which were issued on Nov. 26.

The exchange offer will be subject to customary conditions. However it will not be subject to a minimum tender condition.

Banc of America Securities LLC (contact High Yield Special Products at 888 292-0070 or collect at 704-388-4813), Deutsche Bank Securities (call High Yield Capital Markets collect at 212 250-7466) and Lehman Brothers (800 438-3242 or collect at 212 528-7581) are joint lead dealer managers for the exchange. The information agent is D.F. King & Co. (800 431-9633 or collect at 212 269-5550).

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.