Chesapeake Energy completes tender offer for 8 3/8% 2008 notes; 91% tendered

By Paul Deckelman

New York, Dec. 29 - Chesapeake Energy Corp. said it had completed its tender offer and consent solicitation for its 8 3/8% senior notes due 2008, which expired as scheduled at midnight ET on Dec. 28 without extension.

As of that deadline, the company had received valid tenders of $190.825 million of the notes, or about 91% of the outstanding amount, unchanged from the amount which had been tendered by the Dec. 13 consent deadline.

The company accepted all of the tendered notes for purchase and paid for them.

As previously announced, Chesapeake, an Oklahoma City-based natural gas producer, said on Nov. 30 that it had begun a cash tender offer for any and all of its $209.815 million outstanding principal amount of 8 3/8% notes and was also soliciting consents to amend the notes' indenture to eliminate substantially all of the restrictive covenants.

It set a consent deadline of 5 p.m. ET on Dec. 13 and said the offer would expire at midnight ET on Dec. 28, subject to possible extension.

The company said that holders tendering their notes by the consent deadline would receive total consideration of $1,084.33 per $1,000 principal amount of notes tendered and accepted for payment, including a $10 per $1,000 principal amount consent payment. Holders tendering after the consent date but before the expiration would receive consideration of $1,074.33 per $1,000 principal amount but would not receive the consent payment. All tendering noteholders would also receive accrued interest on their securities up to but not including the payment date.

Chesapeake said that holders could not tender without also delivering consents or vice versa.

It said the tender offer would be subject to certain conditions, including the tender of at least a majority of the principal amount of the outstanding notes and completion of an offering of senior notes to be used to finance the tender offer (high-yield syndicate sources said on Dec. 1 that Chesapeake had sold $600 million of 6 3/8% senior notes due 2015 at 99.056 in a Rule 144A offering).

On Dec. 13, Chesapeake said it had received tenders of $190.825 million of its 8 3/8% notes by the consent deadline, which expired as scheduled at 5 p.m. ET without extension.

As a result, the company said it had sufficient consents to amend the note indenture and expected to make payment for the notes on Dec. 14, at which time the amendments would become effective.

Deutsche Bank Securities Inc. was the dealer manager and solicitation agent for the offer (contact High Yield Capital Markets at 800 553-2826 or call collect 212 250-7466). MacKenzie Partners Inc. was the information agent (800 322-2885 or call collect 212 929-5500).

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