Chesapeake Energy Corporation (NYSE:CHK) has announced that it has successfully priced its term loan, proposed earlier, at $1.5 billion. The company had initially planned it to be worth $1 billion, but had later up-sized after it received strong demand. A total of three parties have agreed to jointly finance the loan, including Goldman Sachs Bank, MUFG and Citigroup Global Markets. It should be noted here that subsidiaries of Chesapeake would be serving as guarantors for the loan. As such, the revolving credit facility of CHK and its subsidiaries would be secured for the process.
The company plans to use for financing tender offers of its unsecured notes. CHK also noted that the remaining proceeds would further be used to reduce its debt and for corporate purposes. The company reported that the loan would be valid for a period of 5-years and would carry an interest rate of 7.5% per annum, plus LIBOR. Furthermore, CHK expected the loan to close on August 23, 2016, subject to final documentation and closing conditions, but it has yet to provide an update on the matter.
Earlier last week, the company commenced cash tender offers to purchase $500 million worth of the outstanding notes of Chesapeake. The tender offer would be valid until September 12, 2016. However, tender offers can be withdrawn only prior to August 25, 2016. As such, anyone who tenders their notes after this date would not be allowed to withdraw their tenders, unless required by law.
Furthermore, Chesapeake has also announced that it would convey its interests in the Barnett Shale operating area, to Saddle Barnett Resources LLC. The move is expected to increase CHK’s operating income by almost $200-$300 million per year, from FY2016 through FY2019. Moreover, this would also reduce the company’s commitments in the area, worth $1.9 billion.
Chesapeake Energy Corporation (NYSE:CHK) completed the August 22 trading session, without recording an overall change in its share value, despite having a trade volume of 13,000 shares, to close at $6.09 per share.