Chesapeake Energy buys back $1.39 billion of notes in tender offers for 7%, 6 5/8%, 6¼% notes

By Angela McDaniels

Tacoma, Wash., Aug. 31 - Chesapeake Energy Corp. received tenders for $1,394,211,000 principal amount of notes in the tender offers and consent solicitations that expired at midnight ET on Aug. 30.

The notes that were eligible for the offers were the company's $300 million of 7% senior notes due 2014, $600 million of 6 5/8% senior notes due 2016 and $600 million of 6¼% senior notes due 2018.

As previously reported, holders had tendered $245,051,000 of 7% notes, $566,242,000 of 6 5/8% notes and $582,263,000 of 6¼% notes as of 5 p.m. ET on Aug. 16, the consent date. The company purchased these notes on Aug. 17.

Chesapeake Energy has received and accepted an additional $60,000 of 7% notes, $388,000 of 6 5/8% notes and $207,000 of 6¼% notes, according to a company news release.

The company was soliciting consents to the adoption of some proposed amendments to each of the indentures governing the notes to, among other things, eliminate substantially all of the restrictive covenants, some events of default and other related provisions.

The tenders and consents received as of the consent date were enough to make the amendments.

For each $1,000 principal amount, the purchase price is $1,026.50 for the 7% notes, $1,036.25 for the 6 5/8% notes and $1,034.00 for the 6¼% notes.

These amounts include a consent payment of $25.00 for each note tendered by the consent time.

Holders also received accrued interest up to but excluding the applicable settlement date.

The company will redeem for cash all of the notes that were not tendered into the offers.

For each $1,000 principal amount, the redemption price will be $1,023.33 for the 7% notes, $1,033.13 for the 6 5/8% notes and $1,031.25 for the 6¼% notes.

Holders also will receive accrued interest up to the redemption date.

The consummation of each tender offer was conditioned on the receipt of consents from holders of at least a majority of that series of notes by the consent time.

In addition, Chesapeake's obligation to purchase notes under the tender offers was conditioned on the receipt of at least $1.6 billion of proceeds from a public offering of one or more series of new senior notes.

The company priced a $2 billion two-part offering of senior notes on Aug. 9. The deal included $1.4 billion of 10-year notes that priced at par to yield 6 5/8% and $600 million of eight-year notes that priced at par to yield 6 7/8%.

The dealer manager and solicitation agent for the tender offers was Credit Suisse Securities (USA) LLC (800 820-1653 or 212 325-5912). The information agent and depositary was Global Bondholder Services Corp. (212 430-3774 for banks and brokers, others call 866 952-2200).

Chesapeake Energy produces natural gas and is based in Oklahoma City.

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