Chesapeake Energy tenders for 8½% notes, considers exchange for 8 1/8% notes

New York, Nov. 11 - Chesapeake Energy Corp. (Ba3) said that it plans to begin a cash tender offer for all of its $110.669 million of 8½% senior notes due 2012, as well as a related solicitation of noteholder consents to proposed changes in the notes' indenture.

The company said that the tender offer and consent solicitation would begin on Nov. 12. It set a consent deadline of 5 p.m. ET on Nov. 25, with an initial payment date (for those notes tendered by the consent deadline) on or about Nov. 26. The offer is scheduled to expire at 12 midnight ET on Dec. 10, with all deadlines subject to possible extension.

Chesapeake, an Oklahoma City-based independent natural gas producer, said that holders who validly tender their notes by the consent deadline will receive the total consideration of $1,063.37 per $1,000 principal amount of notes tendered and accepted for purchase, which will consist of the purchase price of $1,033.37 and the consent payment of $30.

Holders who validly tender their notes after the consent deadline but before the offer expires will receive the purchase price of $1,033.37 per $1,000 principal amount, but no consent payment. Payment for notes tendered after the consent deadline will be made promptly after the expiration deadline.

All holders whose notes are accepted for payment will also receive accrued and unpaid interest up to, but not including, the date of payment.

Chesapeake said that in connection with the offer, it is soliciting consents to certain proposed amendments that would eliminate substantially all of the restrictive covenants in the notes' indenture. Holders may not tender their notes without delivering consents or deliver consents without tendering their notes.

The company said that the offer is subject to the satisfaction of certain conditions, including the company's receipt of tenders of notes representing at least a majority of the outstanding principal amount, and the completion of a recently announced private offering of senior notes which will be used to finance the offer.

Chesapeake separately but concurrently announced that it plans to sell $200 million of new senior notes due 2016 in a Rule 144A transaction. It also announced that subject to market and other conditions, it is considering offering to exchange, in a private placement, up to $500 million of its existing 8 1/8% senior notes due 2011 for additional senior notes issued in one or more series maturing after 2011, including from its existing series or the series of new notes described above).

Banc of America Securities LLC is dealer manager and solicitation agent for the offer (call High Yield Special Products at 888 292-0070 or collect at 704 388-4813). D.F. King & Co., Inc. is the information agent (800 628-8532 or collect at 212 493-6920).

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