Chesapeake Energy Corp. (NYSE:CHK) has engaged Bank of America NA, Goldman Sachs Bank USA and Jefferies Finance LLC to assist with the arrangement of an unsecured five-year term loan facility in an aggregate principal amount of $2.0 billion. Chesapeake intends to use the net proceeds of the new term loan facility to repay the remaining outstanding borrowings under the company’s existing term loan facility arranged in May 2012 and to repay outstanding borrowings under the company’s corporate revolving credit facility.
Archie W. Dunham, Chesapeake’s Non-Executive Chairman of the Board, stated: “The board and management believe current corporate loan market conditions offer attractive refinancing opportunities on favorable terms. By using the proceeds of this loan to repay more costly debt and provide excess liquidity, we will enhance our financial flexibility and ensure our ability to complete our planned asset sales efficiently. The board and management remain committed to reducing debt levels to $9.5 billion or below as we execute on a more focused drilling program on our existing assets.”
Amounts borrowed under the new term loan facility will be unsecured and will be unconditionally guaranteed on a joint and several basis by Chesapeake’s direct and indirect wholly owned domestic subsidiaries that are subsidiary guarantors under the company’s existing senior notes indentures. The new term loan facility will permit Chesapeake to repay other unsecured indebtedness, including amounts outstanding under the existing term loan facility, Chesapeake’s 6.775% Senior Notes due 2019, Chesapeake’s 7.625% Senior Notes due 2013 and up to $1.2 billion of other senior unsecured indebtedness. Additionally, the new term loan facility will permit Chesapeake to refinance its existing senior unsecured indebtedness with longer-dated senior unsecured notes.
Chesapeake's ability to establish the new facility and borrow thereunder will be subject to the receipt of commitments from lenders to provide the facility, the negotiation and execution of definitive loan documents and other customary conditions.