Chesapeake Energy Corporation (NYSE: CHK) announced today that it has commenced cash tender offers to purchase up to $750,000,000 aggregate purchase price, exclusive of accrued interest, of outstanding notes of Chesapeake .
No more than $200,000,000 aggregate purchase price, exclusive of accrued interest , of 6.625% Senior Notes due 2020 and 6.875% Senior Notes due 2020, and no more than $200,000,000 less the aggregate purchase price, exclusive of accrued interest, of the Priority 2 Notes validly tendered and accepted for purchase, of 6.125% Senior Notes due 2021 and 5.375% Senior Notes due 2021, will be purchased in the Tender Offers. The terms and conditions of the Tender Offers are described in an Offer to Purchase dated May 22, 2017 and the related Letter of Transmittal.
Chesapeake also announced that it has priced its private placement to eligible purchasers of $750,000,000 aggregate principal amount of 8.00% senior notes due 2027.
The notes will bear interest at a rate of 8.00% per annum, payable semi-annually on June 15 and December 15 of each year, beginning on December 15, 2017. The notes will mature on June 15, 2027. Chesapeake may redeem some or all of the notes at any time prior to June 15, 2022 at a price equal to 100% of the principal amount of the notes to be redeemed plus a “make-whole” premium. In addition, Chesapeake may redeem some or all of the notes at any time on or after June 15, 2022 at the applicable redemption price in accordance with the terms of the notes and the indenture and supplemental indenture governing the notes. In addition, subject to certain conditions, Chesapeake may redeem up to 35% of the aggregate principal amount of the notes at any time prior to June 15, 2020 at a price equal to 108% of the principal amount of the notes to be redeemed using the net proceeds of certain equity offerings by Chesapeake.
The closing of the private placement is expected to occur on June 6, 2017 and is subject to the satisfaction of customary closing conditions.
Chesapeake intends to use the net proceeds from the offering, together with cash on hand and borrowings under its revolving credit facility (if required), to finance tender offers for certain of its senior notes announced today. If the tender offers are not consummated or the net proceeds from the offering exceed the total consideration payable in the tender offers, Chesapeake intends to use the remaining net proceeds from the offering for general corporate purposes, which may include the repayment of outstanding indebtedness under its credit facility and the repayment or repurchase of other indebtedness.
