Chesapeake counts early tenders in capped offers for 10 note series

By Susanna Moon

Chicago, Dec. 20 – Chesapeake Energy Corp. announced the early tender results in the offers for 10 series of notes.

As announced Dec. 6, Chesapeake will spend up to $1.2 billion excluding accrued interest in cash tender offers for 10 series of notes and another $285 million in tenders for two series of convertible notes.

In the first set of tender offers, Chesapeake is offering to buy any and all of three series of notes, up to $150 million of two series of notes and another $150 million for five other note series.

The long-dated notes have an additional cap to keep the aggregate purchase price from exceeding the aggregate principal amount of 6½% senior notes due 2017, 7¼% senior notes due 2018 and floating-rate senior notes due 2019 accepted for purchase as well as other notes purchased in the concurrent tender offers.

The No. 1 priority notes are as follows, with a total purchase price for each $1,000 principal amount:

• $222,752,000 of 6½% senior notes due 2017 with a total purchase price of $1,034;

• $349,065,000 of 7¼% senior notes due 2018 with a total purchase price of $1,085; and

• $504,179,000 of floating-rate senior notes due 2019 with a total purchase price of $990.

As of 5 p.m. ET on Dec. 19, the early tender date, holders had tendered $88,977,000 of the 6½% notes, $284,987,000 of the 7¼% notes and $124,577,000 of the floaters, according to the company update.

For the priority 2 notes, the issuer will spend $150 million to tender for two series of notes as follows, with a total purchase price for each $1,000 principal amount:

• $806,882,000 of 6 5/8% senior notes due 2020 with a total purchase price of $1,010; and

• $291,047,000 of 6 7/8% senior notes due 2020 with a total purchase price of $995.

Holders had tendered $26,605,000 of the 6 5/8% notes and $11,998,000 of the 6 7/8% notes as of the early deadline.

For the priority 3 notes, the issuer will spend $150 million to tender for five note series, with a total purchase price for each $1,000 principal amount as follows:

• $554,348,000 of 6 1/8% senior notes due 2021 with a total purchase price of $962.50;

• $272,264,000 of 5 3/8% senior notes due 2021 with a total purchase price of $922.50;

• $453,055,000 of 4 7/8% senior notes due 2022 with a total purchase price of $895.00;

• $2,425,206,000 of 8% senior secured second-lien notes due 2022 with a total purchase price of $1,060.00; and

• $338,852,000 of 5¾% senior notes due 2023 with a total purchase price of $915.00.

Investors had tendered $3,959,000 of the 6 1/8% notes, $2.33 million of the 5 3/8% notes, $1.83 million of the 4 7/8% notes, $6,203,000 of the 8% notes and $1,099,000 of the 5¾% notes by the early date.

The total purchase price includes an early tender premium of $30.00 for each $1,000 principal amount of notes tendered by the early deadline.

The company also will pay accrued interest to but excluding the settlement date.

The tender offers will continue until 11:59 p.m. ET on Jan. 4.

Tendered notes may no longer be withdrawn, as of 5 p.m. ET on Dec. 19.

Chesapeake previously said it reserves the right to increase or decrease the tender caps without extending the early tender date or the withdrawal deadline.

The company also reserves the right to accept for purchase any tendered notes at any point following the early deadline.

If the offers are oversubscribed as of the early deadline, Chesapeake said it will stop accepting notes tendered afterward.

The offers are not conditioned upon a minimum amount of notes being tendered but do require closing of a concurrent private offering of $750 million principal amount of senior notes due 2025.

As previously reported, Chesapeake priced an upsized $1 billion issue of 8% eight-year senior notes at 98.522 to yield 8¼% on Dec. 7.

Convertibles tender

As previously announced, Chesapeake also is holding separate tender offers to purchase its outstanding 2.5% contingent convertible senior notes due 2037 and 2.25% contingent convertible senior notes due 2038.

In the offers for the convertibles, the company will spend up to $100 million for the 2.5% contingent convertibles and up to $185 million for the 2.25% contingent convertibles.

The purchase price for each $1,000 principal amount will be $1,005 for the 2.5% contingent convertibles and $985.00 for the 2.25% contingent convertibles.

The tender caps exclude accrued interest to but excluding the settlement date, which will also be paid.

The tender offers will end at 11:59 p.m. ET on Jan. 4.

Chesapeake expects to fund the offers with cash on hand.

Deutsche Bank Securities Inc. (855 287-1922 or 212 250-7527) is the dealer manager. Global Bondholder Services Corp. (866 470-4200 or 212 430-3774) is the depositary and the information agent.

Chesapeake Energy is an Oklahoma City-based producer of natural gas, oil and natural gas liquids.

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