Chesapeake Energy extends exchange for 8 1/8% notes

New York, Dec. 24 - Chesapeake Energy Corp. said it has extended its exchange offer for its 8 1/8% senior notes due April 2011.

The deadline to receive the early participation payment of $10.00 cash per $1,000 principal amount to 5.00 p.m. ET on Jan. 9.

The deadline to withdraw is also extended to the same date as the early payment deadline.

The offer now ends at 5.00 p.m. ET on Jan. 12 with settlement expected on Jan. 14. Previously the expiration was Dec. 29.

Chesapeake Energy also said it has amended the offer so that it will only be completed it if first sells at least $225 million gross proceeds of common stock.

Chesapeake Energy (Ba3/BB-) previously said that it would extend the deadlines for the offer to give holders an opportunity to review information related to planned acquisitions by the company.

Chesapeake announced plans Dec. 22 to acquire $510 million of Mid-Continent, Permian Basin and onshore Gulf Coast oil and natural gas assets, which are expected to be fully closed by January, subject to customary closing conditions. It said that it anticipates financing the acquisitions using about 50% common equity and 50% borrowings.

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 in exchange for the existing 8 1/8% notes.

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.

Chesapeake said that in addition to its issuance of the new notes of whichever series in exchange for the existing notes and their accrued interest, 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 that they might tender. If more than $500 million in aggregate principal amount of the 2011 notes were to be 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, of which $236.7 million principal amount is currently 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 which were issued on Nov. 26.

The exchange offer will be subject to certain 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 (contact High Yield Capital Markets collect at 212 250-7466) and Lehman Brothers (800 438-3242 or collect at 212 528-7581) will act as joint lead dealer managers. The information agent is D.F. King & Co. (800 431-9633 or collect at 212 269-5550).

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