Chesapeake Energy holders tender $530.89 million of convertibles

By Angela McDaniels

Tacoma, Wash., May 2 - Chesapeake Energy Corp. said it received tenders for $530,894,000 principal amount of its contingent convertible senior notes and accepted all of the tendered convertibles for purchase.

Tender offers for the convertibles began April 4 and expired at 11:59 p.m. ET on April 29.

The company said it would purchase up to $300 million of its $451,071,000 2.75% contingent convertibles due 2035, up to $350 million of its $1,377,979,000 2.5% contingent convertibles due 2037 and up to $350 million of its $612,118,000 2.25% contingent convertibles due 2038.

Holders tendered $55.27 million of the 2.75% convertibles, $210,118,000 of the 2.5% convertibles and $265,506,000 of the 2.25% convertibles, according to a company news release.

For each $1,000 principal amount, the company will pay $1,164.49 for the 2.75% convertibles, $1,095.83 for the 2.5% convertibles and $935.07 for the 2.25% convertibles.

Holders will also receive accrued interest up to but excluding the settlement date, which was expected to be May 2.

The purchase prices are equal to the sum of:

• The average volume-weighted price per share of the company's common stock beginning on April 20 and ending on April 27 (excluding April 22) multiplied by the conversion factor, which is 17.9952 for the 2.75% convertibles, 16.5351 for the 2.5% convertibles and 7.5678 for the 2.25% convertibles; and

• A tender premium of $577 for the 2.75% convertibles, $556 for the 2.5% convertibles and $688 for the 2.25% convertibles.

Chesapeake also held tender offers for seven series of its straight corporate debt. Five of these offers expired at 11:59 p.m. ET on April 29, and two were extended to 11:59 p.m. ET on May 13. The company accepted $393,638,000 and €255,835,000 of notes for purchase in the expired offers, and $577,396,000 of notes have been tendered in the extended offers so far.

None of the tender offers were conditioned on the results of the other offers.

The dealer managers were Deutsche Bank Securities Inc. (855 287-1922, 212 250-7527 or 44 0 20 7545 8011), Citigroup Global Markets Inc. (800 558-3745, 212 723-6106 or 44 0 20 7986 8969) and RBS Securities Inc. (877 297-9832, 203 897-6145 or 44 0 20 7085 4634). The information agent was Global Bondholder Services Corp. (212 430-3774 for banks and brokers, others call 866 470-4200).

Chesapeake produces natural gas and is based in Oklahoma City.

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