Chesapeake begins tender, consent bid for subsidiaries’ 6 7/8% notes

By Sarah Lizee

Olympia, Wash., Dec. 4 – Chesapeake Energy Corp. launched a tender offer, on behalf of wholly owned subsidiaries Brazos Valley Longhorn, LLC and Brazos Valley Longhorn Finance Corp., to purchase for cash any and all of the $617.81 million 6 7/8% senior notes due 2025, according to a press release.

The total consideration per $1,000 of existing notes will be $970.00, which includes an early tender premium of $50.00.

Only holders who tender their notes by the early tender time, 5 p.m. ET on Dec. 19, will be eligible to receive the early tender premium.

The tender offer expires at 11:59 p.m. ET on Jan. 6, 2020.

Holders will also receive accrued interest.

Concurrently with the tender offer, Chesapeake is conducting a simultaneous solicitation of consents from each registered holder with respect to proposed amendments to the indenture governing the notes.

If holders of the notes validly tender their notes in the tender offer, they will be deemed to have validly delivered their related consents. A holder may not deliver consents without tendering the related notes under the offer and may not tender notes without delivering the related consents.

The supplemental indenture containing the proposed amendments would amend the existing indenture to, among other things, eliminate substantially all of the restrictive covenants, some events of default and some other provisions currently applicable to the notes.

Tenders and consents may be withdrawn at or before the early tender deadline, but not after.

The tender offer and consent solicitation is subject to, and conditioned upon, the satisfaction or waiver of some conditions, including Chesapeake receiving consents from holders of a majority of the outstanding notes at or prior to the early tender date, and Chesapeake obtaining committed financing for floating-rate term loans totaling $1.5 billion.

The tender offer and consent solicitation are being made in connection with a concurrent secured term loan financing and a concurrent offer to exchange Chesapeake's 8% senior notes due 2027, 8% senior notes due 2026, 8% senior notes due 2025, 7˝% senior notes due 2026 and 7% senior notes due 2024 for new 11˝% senior secured second-lien notes due 2025 to be issued by Chesapeake.

The tender offer and consent solicitation are not contingent or conditioned upon the completion of the Chesapeake exchange offers.

J.P. Morgan Securities LLC (212 834-3424 collect or 866 834-4666 toll-free) is acting as the dealer manager and solicitation agent in the tender offer and consent solicitation. Global Bondholder Services Corp. (866 470-4300 toll-free or 212 430-3774 collect) is the depositary and the information agent.

The natural gas producer is based in Oklahoma City.

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