OKLAHOMA CITY, Dec. 4, 2019 /PRNewswire/ -- Chesapeake
Energy Corporation (NYSE:CHK) (the "Company") today announced the
commencement of private offers of up to $1,500,000,000 aggregate principal amount (the
"Maximum Exchange Amount") of its new 11.5% Senior Secured Second
Lien Notes due 2025 (the "Second Lien Notes") in exchange for
certain outstanding senior unsecured notes (collectively, the
"Existing Notes") issued by the Company, upon the terms and subject
to the conditions set forth in the Company's confidential offering
memorandum and the related letter of transmittal, each dated
December 4, 2019. The Company may,
subject to applicable law, increase the Maximum Exchange Amount
without extending the Early Tender Date (as defined below) or
reinstating withdrawal rights. The Company does not expect to
increase the Maximum Exchange Amount to an amount greater than
$2,340,000,000, if at all. The
Exchange Offers are conditioned upon sufficient Existing Notes
being tendered such that at least $1,500,000,000 aggregate principal amount of
Second Lien Notes will be issued in the Exchange Offers (the
"Minimum Second Lien Note Condition").
The following table sets forth each series of Existing Notes
subject to the exchange offers, the acceptance priority level (the
"Acceptance Priority Level") for such series and the applicable
consideration offered for such series in the applicable exchange
offer (each, an "Exchange Offer" and collectively, the "Exchange
Offers").
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Principal Amount
of
Second Lien
Notes(1)
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Title of Series of
Existing Notes
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CUSIP
Number(s)
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Aggregate
Outstanding
Principal Amount
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Acceptance
Priority Level(2)
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Early
Exchange
Consideration,
if
Tendered
and Not
Withdrawn
at or Prior to
the Early
Tender Date
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Late
Exchange
Consideration,
if
Tendered
After the
Early
Tender Date
and at or
Prior to the
Expiration Date
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8.00% Senior Notes
due 2027
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165167CV7
165167CZ8
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$1,090,000,000
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1
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$700.00
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$650.00
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8.00% Senior Notes
due 2026
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165167DC8
U16450AY1
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$918,514,000
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2
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$700.00
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$650.00
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8.00% Senior Notes
due 2025
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165167CT2
165167CU9
U16450AU9
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$1,244,498,000
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3
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$700.00
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$650.00
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7.50% Senior Notes
due 2026
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165167DB0
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$400,000,000
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4
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$620.00
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$570.00
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7.00% Senior Notes
due 2024
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165167DA2
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$850,000,000
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5
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$620.00
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$570.00
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(1)
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For each $1,000
principal amount of Existing Notes.
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(2)
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All Existing Notes
that are tendered for exchange in an Exchange Offer at or prior to
the Early Tender Date will have priority over Existing Notes that
are tendered for exchange after the Early Tender Date, even if such
Existing Notes tendered after the Early Tender Date have a higher
Acceptance Priority Level than Existing Notes tendered at or prior
to the Early Tender Date and even if the Company does not elect to
have an Early Settlement Date. The maximum amount of Second Lien
Notes that the Company will issue in the Exchange Offers equals
$1,500,000,000 aggregate principal amount of Second Lien Notes,
which the Company reserves the right to increase at any time in its
sole discretion, subject to compliance with applicable law and the
terms of its outstanding indebtedness. The Company does not expect
to increase the Maximum Exchange Amount to an amount greater than
$2,340,000,000, if at all. The Exchange Offers are conditioned upon
sufficient Existing Notes being tendered such that at least
$1,500,000,000 aggregate principal amount of Second Lien Notes will
be issued in the Exchange Offers.
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As of December 4, 2019, Eligible
Holders (as defined below) representing (a) approximately
$723 million, or approximately 79%,
of the aggregate principal amount of the 8.00% Senior Notes due
2026 and (b) approximately $262
million, or approximately 25%, of the aggregate principal
amount of the 8.00% Senior Notes due 2027 have committed to tender
their Existing Notes in the applicable Exchange Offer at or prior
to the applicable Early Tender Date.
The Exchange Offers are being made only to Eligible Holders.
Eligible Holders must validly tender (and not validly withdraw)
their Existing Notes at or prior to 5:00
p.m., New York City time,
on December 17, 2019 (the "Early
Tender Date"), in order to be eligible to receive the applicable
"Early Exchange Consideration" shown in the table above. Existing
Notes validly tendered (and not validly withdrawn) after the Early
Tender Date but prior to the Expiration Date (as defined below)
will be eligible to receive the applicable "Late Exchange
Consideration" set out in such table.
The Exchange Offers will expire at 11:59
p.m., New York City time,
on January 2, 2020 (the "Expiration
Date"). The final settlement date for the Exchange Offers
will occur promptly after the Expiration Date and is expected to
occur on January 6, 2020 (the "Final
Settlement Date"), subject to all conditions to the Exchange Offers
having been satisfied or waived by the Company. The Company may, in
its sole discretion, elect to settle an Exchange Offer for any or
all series of Existing Notes validly tendered (and not validly
withdrawn) at or prior to the Early Tender Date at any time after
the Early Tender Date and at or prior to the Expiration Date (the
"Early Settlement Date"), subject to all conditions to the Exchange
Offers having been satisfied or waived by the Company. Such Early
Settlement Date, if any, will be determined at the Company's option
and, if elected, would not be expected to occur earlier than
December 19, 2019.
Eligible Holders of Existing Notes accepted for exchange in the
Exchange Offers will also receive a cash payment equal to the
accrued and unpaid interest on such Existing Notes accepted in the
Exchange Offers from the applicable latest interest payment date
to, but not including, the applicable settlement date. Interest on
the Second Lien Notes will accrue from the date of first issuance
of Second Lien Notes.
Tenders may be validly withdrawn at any time at or prior to
5:00 p.m., New York City time, on December 17, 2019, but not thereafter unless
required by law. The Company may, subject to applicable law,
increase the Maximum Exchange Amount without extending the Early
Tender Date or reinstating withdrawal rights. Accordingly, Eligible
Holders should not tender any Existing Notes that they do not wish
to have accepted for exchange by the Company. The Company does not
expect to increase the Maximum Exchange Amount to an aggregate
principal amount greater than $2,340,000,000, if at all.
In the event that the Exchange Offers are oversubscribed, the
principal amounts of each series of Existing Notes that are
accepted will be determined in accordance with the "Acceptance
Priority Levels" set forth on the table above. All Existing
Notes validly tendered and not validly withdrawn having a higher
Acceptance Priority Level will be accepted for exchange before any
Existing Notes validly tendered having a lower Acceptance Priority
Level will be accepted (with 1 being the highest Acceptance
Priority Level and 5 being the lowest Acceptance Priority Level).
Accordingly, all Existing Notes with an Acceptance Priority Level 1
will be accepted for exchange before any Existing Notes with an
Acceptance Priority Level 2, and so on, until the Maximum Exchange
Amount is allocated. Once all Existing Notes validly tendered (and
not validly withdrawn) in a certain Acceptance Priority Level have
been accepted for exchange, Existing Notes from the next Acceptance
Priority Level may be accepted for exchange. If the remaining
portion of the Maximum Exchange Amount is adequate to exchange some
but not all of the aggregate principal amount of Existing Notes
tendered within the next Acceptance Priority Level, Existing Notes
tendered for exchange in that Acceptance Priority Level will be
accepted for exchange on a pro rata basis, based on the aggregate
principal amount of Existing Notes tendered with respect to that
Acceptance Priority Level, and no Existing Notes with a lower
Acceptance Priority Level will be accepted for exchange. Depending
on the amount tendered and the proration factor applied, if the
principal amount of any series of Existing Notes that are
unaccepted in the applicable Exchange Offer and returned to a
holder as a result of proration would result in less than the
minimum authorized denomination for such series being returned to
such holder, the Company will either accept or reject all of such
holder's validly tendered Existing Notes of such series.
Notwithstanding the foregoing, all Existing Notes that are
tendered for exchange in an Exchange Offer at or prior to the Early
Tender Date will have priority over Existing Notes that are
tendered for exchange after the Early Tender Date, even if such
Existing Notes tendered after the Early Tender Date have a higher
Acceptance Priority Level than Existing Notes tendered at or prior
to the Early Tender Date and even if the Company does not elect to
have an Early Settlement Date. If the principal amount of Existing
Notes validly tendered at or prior to the Early Tender Date
constitutes a principal amount of Existing Notes that, if accepted
for exchange by the Company, would result in the Company issuing
Second Lien Notes having an aggregate principal amount equal to or
in excess of the Maximum Exchange Amount, the Company will not
accept any Existing Notes tendered for exchange after the Early
Tender Date, regardless of the Acceptance Priority Level of such
Existing Notes, unless the Company increases the Maximum Exchange
Amount.
The Second Lien Notes will be fully and unconditionally
guaranteed, jointly and severally, on a senior basis, by certain
subsidiaries of the Company. The Second Lien Notes and the
guarantees will be secured by second-priority liens on all of the
Company's and the guarantors' assets that secure the Company's
existing credit facility and certain other permitted indebtedness,
on a first-priority basis, subject to certain exceptions. Any
Existing Notes that remain outstanding after the Exchange Offers
will be effectively subordinated to the Second Lien Notes to the
extent of the value of the collateral securing the Second Lien
Notes.
The Exchange Offers are being made in connection with a
concurrent secured term loan financing and a concurrent cash tender
offer and consent solicitation (the "BVL Tender Offer") with
respect to the 6.875% Senior Notes due 2025 (the "BVL Notes")
issued by Brazos Valley Longhorn, L.L.C. and Brazos Valley Longhorn
Finance Corp. (the "Concurrent Transactions") The Exchange Offers
are not conditioned upon the completion of the Concurrent
Transactions.
The Exchange Offers are conditioned on the satisfaction or
waiver of certain customary conditions, as described in the
confidential offering memorandum. Additionally, the Exchange Offers
are conditioned upon the Minimum Second Lien Note Condition. The
Company may terminate, withdraw, amend or extend any of the
Exchange Offers.
The Exchange Offers will only be made, and the confidential
offering memorandum and other documents relating to the Exchange
Offers will only be distributed to, holders who complete and return
an eligibility letter confirming that they are (i) "qualified
institutional buyers" as defined in Rule 144A under the Securities
Act of 1933, as amended ("Securities Act"), or (ii) outside
the United States and persons
other than "U.S. persons" as defined in Rule 902 under the
Securities Act in offshore transactions in compliance with
Regulation S, who are "non-U.S. qualified offerees" (as defined in
the eligibility letter) (such persons, "Eligible Holders"). Holders
who desire to obtain and complete an eligibility letter should
either visit the website for this purpose at
http://www.gbsc-usa.com/eligibility/Chesapeake or call Global
Bondholder Services Corporation, the Information Agent and
Depositary for the Exchange Offers at (866) 470-4300 (toll-free) or
(212) 430-3774 (collect for banks and brokers).
The Company is making the Exchange Offers only to Eligible
Holders through, and pursuant to, the terms of the confidential
offering memorandum and the related letter of transmittal. The
Company and its affiliates do not make any recommendation as to
whether Eligible Holders should tender or refrain from tendering
their Existing Notes. Eligible Holders must make their own decision
as to whether to tender Existing Notes and, if so, the principal
amount of the Existing Notes to tender. The Company may, to the
extent permitted by applicable law, and to the extent permitted by
certain restrictive covenants governing the Company's indebtedness,
after the Expiration Date of the Exchange Offers, purchase Existing
Notes in the open market, in privately negotiated transactions,
through subsequent tender or exchange offers or otherwise. The
Exchange Offers are not being made to holders of Existing Notes in
any jurisdiction in which the making or acceptance thereof would
not be in compliance with the securities, blue sky or other laws of
such jurisdiction.
The securities to be offered in the Exchange Offers have not
been registered under the Securities Act or any state securities
laws; and unless so registered, the securities may not be offered
or sold in the United States or to
U.S. persons except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. This press
release shall not constitute an offer to sell or a solicitation of
an offer to buy, nor shall there be any sale of the Second Lien
Notes, in any jurisdiction in which such an offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. In addition, this
press release is neither an offer to purchase nor a solicitation of
an offer to sell any Existing Notes in the Exchange Offers or any
BVL Notes in the BVL Tender Offer.
Headquartered in Oklahoma City, Chesapeake Energy
Corporation's (NYSE: CHK) operations are focused on discovering and
developing its large and geographically diverse resource base of
unconventional oil and natural gas assets onshore in the
United States.
This news release includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including the
timing of the settlement, the size of the Exchange Offers and
expected participation by certain holders of Existing Notes.
Forward-looking statements are statements other than statements of
historical fact. They include statements regarding the timing of
the settlement, the size of the exchange offers and expected
participation by certain holders of Existing Notes. Although we
believe the expectations and forecasts reflected in the
forward-looking statements are reasonable, we can give no assurance
they will prove to have been correct. They can be affected by
inaccurate or changed assumptions or by known or unknown risks and
uncertainties. Factors that could cause actual results to
differ materially from expected results include our ability to
comply with the covenants under our revolving credit facilities and
other indebtedness and the related impact on our ability to
continue as a going concern, the volatility of oil, natural gas and
NGL prices and other factors described under "Risk Factors" in Item
1A of our annual report on Form 10-K and any updates to those
factors set forth in Chesapeake's subsequent quarterly reports on
Form 10-Q or current reports on Form 8-K.
INVESTOR
CONTACT:
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MEDIA
CONTACT:
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Brad Sylvester,
CFA
(405)
935-8870
ir@chk.com
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Gordon
Pennoyer
(405)
935-8878
media@chk.com
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SOURCE Chesapeake Energy Corporation