Chesapeake Energy Corp. (CHK) confirmed it will boost the size of a short-term loan offering to $4 billion, citing strong demand from institutional investors.
The loan, which priced at 97 cents on the dollar, carries an initial coupon of 8.5% through the end of this year, based on the current London interbank offered rate.
The oil-and-gas producer said it will use about $3.8 billion of proceeds from the debt offering to repay the balance on its credit line. The new loan was syndicated by affiliates of Goldman Sachs Group Inc. (GS) and Jefferies Group Inc. (JEF).
The upsized offering comes after Chesapeake rattled bond investors on Friday by detailing relatively harsh terms for the short-term loan, which the company is using to help fund its capital expenditure needs.
"We appreciate this strong vote of confidence from investors," said Chairman and Chief Executive Aubrey K. McClendon, who plans to relinquish his chairman role to a yet-unnamed non-executive director after his personal financial dealings attracted new scrutiny.
Chesapeake faces a significant funding gap to its effort to boost oil and natural-gas liquids production. Low natural gas prices have punished the company's operating results as a two-year glut knocks North America's supply of the fuel out of whack with demand.
Chesapeake said it now has more than $4.7 billion of liquidity, including unrestricted cash on hand and available borrowing capacity under its revolving credit lines.
Shares were recently up 5 cents, at $14.70 after hours. The stock was off 51% over the past year through Tuesday's close.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com