Chesapeake Amends Credit Facility Agreement With Lenders

Chesapeake Energy Corp. said it has reached an amended agreement with its lenders that delays the next review of its $4 billion revolving credit facility until June of 2017, allows the company to borrow as much as $2.5 billion and offers relief on some terms of its debt covenants.

The company's shares, down 75% in the past 12 months, were up 5.1% at $3.95 premarket.

Though Chesapeake's borrowing base was reaffirmed at $4 billion, the company also has pledged additional assets as collateral as part of the agreement, though specific details weren't provided.

Under the amended agreement, Chesapeake will be allowed to incur up to $2.5 billion of first-lien debt, with its existing lenders receiving priority when the debt is repaid. Chesapeake's senior secured debt ratio covenant was temporarily suspended until September of 2017 and its interest coverage ratio requirement was reduced through March of next year.

Under the accord, the energy company is required to maintain liquidity of at least $500 million, which would increase to $750 million if certain credit metrics aren't met at year's end.

The Oklahoma City company, co-founded by the late Aubrey McClendon, has been working to shore up its balance sheet as commodity prices remain low. Chesapeake grew to become one of the dominant U.S. gas explorers during the shale boom. Fueled by cheap debt, the company expanded aggressively in Ohio, Texas and other parts of the U.S., becoming the second-largest U.S. natural-gas producer behind Exxon Mobil Corp.

Mr. McClendon died in a fiery car crash last month, a day after he was indicted on a charge of conspiring to rig bids on oil and gas leases in Oklahoma. A pioneer the shale energy boom, his extreme risk-taking had caused him personal and professional financial hardships that spurred activist investors, including Carl Icahn, to oust him as Chesapeake's chief executive in 2013.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

April 11, 2016 09:25 ET (13:25 GMT)

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