OKLAHOMA CITY, June 28, 2020 /PRNewswire/ -- Chesapeake
Energy Corporation (NYSE: CHK) today announced that the Company has
voluntarily filed for Chapter 11 protection in the U.S. Bankruptcy
Court for the Southern District of Texas ("the Court") to facilitate a
comprehensive balance sheet restructuring. Chesapeake intends to
use the proceedings to strengthen its balance sheet and restructure
its legacy contractual obligations to achieve a more sustainable
capital structure. Chesapeake will operate in the ordinary course
during the Chapter 11 process.
Chesapeake entered into a Restructuring Support Agreement
("RSA") with 100% of the lenders under its revolving credit
facility, holders of approximately 87% of the obligations under its
Term Loan Agreement, approximately 60% of its senior secured second
lien notes due 2025, and approximately 27% of its senior unsecured
notes, pursuant to which Chesapeake will implement a Chapter 11
plan of reorganization to eliminate approximately $7 billion of debt.
As part of the RSA, the Company has secured $925 million in debtor-in-possession ("DIP")
financing from certain lenders under Chesapeake's revolving credit
facility, which will be available upon Court approval. The
financing package will provide Chesapeake the capital necessary to
fund its operations during the Court-supervised Chapter 11
reorganization proceedings. The Company and certain lenders
under Chesapeake's revolving credit facility have also agreed to
the principal terms of a $2.5 billion
exit financing, consisting of a new $1.75
billion revolving credit facility and a new $750 million term loan. Additionally, the Company
has the support of its term loan lenders and secured note holders
to backstop a $600 million rights
offering upon exit.
Doug Lawler, Chesapeake's
President and Chief Executive Officer, stated, "We are
fundamentally resetting Chesapeake's capital structure and business
to address our legacy financial weaknesses and capitalize on our
substantial operational strengths. By eliminating approximately
$7 billion of debt and addressing the
legacy contractual obligations that have hindered our performance,
we are positioning Chesapeake to capitalize on our diverse
operating platform and proven track record of improving capital and
operating efficiencies and technical excellence. With these
demonstrated strengths, and the benefit of an appropriately sized
capital structure, Chesapeake will be uniquely positioned to emerge
from the Chapter 11 process as a stronger and more competitive
enterprise."
Lawler added, "In addition to securing financing to fund our
ongoing operations and facilitate our exit from this process, we
are pleased to have the support of our term loan lenders and
secured note holders to backstop a $600
million rights offering, demonstrating their confidence in
Chesapeake's operating platform and future. We deeply appreciate
the hard work and commitment of our employees, who remain focused
on safely and efficiently executing our business. We look forward
to working productively with our suppliers, business partners and
all stakeholders throughout this process."
Lawler concluded, "Over the last several years, our dedicated
employees have transformed Chesapeake's business — improving
capital efficiency and operational performance, eliminating costs,
reducing debt and diversifying our portfolio. Despite having
removed over $20 billion of leverage
and financial commitments, we believe this restructuring is
necessary for the long-term success and value creation of the
business."
Chesapeake has filed customary motions with the Court seeking a
variety of "first-day" relief, including authority to pay owner
royalties, employee wages and benefits, and certain vendors and
suppliers in the ordinary course for goods and services
provided.
Additional information regarding Chesapeake's Chapter 11 filing
will be available at http://www.chk.com/restructuring-information.
Court filings and information about the claims process are
available at https://dm.epiq11.com/chesapeake. Questions should be
directed to the Company's claims agent by email to
chesapeakeinfo@epiqglobal.com or by phone at 855-907-2082 (toll
free) or 503-520-4448 (toll).
The entities included in the filing are: Chesapeake Energy
Corporation; Brazos Valley Longhorn Finance Corp.; Brazos Valley
Longhorn, LLC; Burleson Sand LLC; Burleson Water Resources, LLC;
Chesapeake AEZ Exploration, L.L.C.; Chesapeake Appalachia, L.L.C.;
Chesapeake E&P Holding, L.L.C.; Chesapeake Energy Louisiana,
LLC; Chesapeake Energy Marketing, L.L.C.; Chesapeake Exploration,
L.L.C.; Chesapeake Land Development Company, L.L.C.; Chesapeake
Louisiana, L.P.; Chesapeake Midstream Development, L.L.C.;
Chesapeake NG Ventures Corporation; Chesapeake Operating, L.L.C.;
Chesapeake Plains, LLC; Chesapeake
Royalty, L.L.C.; Chesapeake VRT, L.L.C.; Chesapeake-Clements
Acquisition, L.L.C.; CHK Energy Holdings, Inc.; CHK NGV Leasing
Company, L.L.C.; CHK Utica, L.L.C.; Compass Manufacturing, L.L.C.;
EMLP, L.L.C.; Empress Louisiana Properties, L.P.; Empress, L.L.C.;
Esquisto Resources II, LLC; GSF, L.L.C.; MC Louisiana Minerals,
L.L.C.; MC Mineral Company, L.L.C.; MidCon Compression, L.L.C.;
Nomac Services, L.L.C.; Northern Michigan Exploratory Company,
L.L.C.; Petromax E&P Burleson, LLC; Sparks Drive SWD, Inc.; WHE
AcqCo., LLC; WHR Eagle Ford LLC; WildHorse Resources II, LLC;
WildHorse Resources Management Company, LLC; and Winter Moon Energy
Corporation.
Kirkland & Ellis LLP is serving as legal counsel, Alvarez
& Marsal is serving as restructuring advisor, Rothschild &
Co and Intrepid Financial Partners are serving as financial
advisors, and Reevemark is serving as communications advisor to the
Company.
Wachtell, Lipton, Rosen & Katz is serving as legal counsel
to the Company's Board of Directors.
Sidley Austin LLP is serving as legal counsel, RPA Advisors, LLC
is serving as financial advisor, and Houlihan Lokey Capital, Inc.
is serving as investment banker to MUFG Union Bank, N.A., the DIP
facility agent and exit facilities agent.
Davis Polk & Wardell LLP and
Vinson & Elkins L.L.P. are serving as co-legal counsel and
Perella Weinberg Partners and Tudor, Pickering, Holt & Co. are
serving as investment bankers to an ad hoc group of the Company's
first lien last out term loan lenders.
Akin Gump Strauss Hauer & Feld LLP is serving as legal
counsel, FTI Consulting, Inc. is serving as financial advisor, and
Moelis & Company LLC is serving as investment banker to
Franklin Advisers, Inc.
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. Forward-looking
statements are statements other than statements of historical fact.
They include statements regarding: (i) the effect of the Chapter 11
reorganization and sufficiency of the financing package; (ii) our
ability to continue implementing operating efficiencies and
technical developments; and (iii) our ability to capitalize on the
reorganization and emerge as a stronger and more competitive
enterprise. 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. Important risks, assumptions and
other important factors that could cause future results to differ
materially from those expressed in the forward-looking statements
are described under "Risk Factors" in Item 1A of our annual report
on Form 10-K for the year ended December 31, 2019. Chesapeake
undertakes no obligation to release publicly any revisions to any
forward looking statements, to report events or to report the
occurrence of unanticipated events.
INVESTOR
CONTACT:
|
MEDIA
CONTACT:
|
Brad Sylvester,
CFA (405)
935-8870 ir@chk.com
|
Gordon
Pennoyer (405)
935-8878 media@chk.com
|
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SOURCE Chesapeake Energy Corporation