Chesapeake Energy begins $550 million tender for five series

By Susanna Moon

Chicago, Sept. 27 – Chesapeake Energy Corp. said it will spend up to $550 million to purchase five series of notes in month-long tender offers.

The early tender deadline is 5 p.m. ET on Oct. 11, and the tender offers will remain open until 11:59 p.m. ET on Oct. 25. Tendered notes may be withdrawn before the early deadline.

First, the issuer will pay up to $350 million excluding accrued interest for its 8% senior secured second-lien notes due 2022.

For the priority 1 notes, the total purchase price will be $1,092.50 for each $1,000 principal amount.

Then the company will accept the priority 2 notes and the priority 3 notes for a purchase price of up to $200 million excluding accrued interest.

For the priority 2 notes, the total purchase price for each $1,000 principal amount will be as follows:

• $1,040 for the $572,621,000 6 5/8% senior notes due 2020; and

• $1,035 for the $278,978,000 6 7/8% senior notes due 2020.

For the priority 3 notes, the total purchase price for each $1,000 principal amount will be as follows:

• $1,012.50 for the $550,327,000 6 1/8% senior notes due 2021; and

• $967.50 for the $269,907,000 5 3/8% senior notes due 2021.

Specifically, the tender offers for the priority 2 notes will be capped at $200 million. After that, the company will purchase the priority 3 notes for an amount equal to $200 million less the amount used to fund the offers for the priority 2 notes, according to a company announcement.

For each series, the total purchase price includes an early tender premium of $30.00 per $1,000 principal amount of notes tendered by the early deadline.

Holders who tender after the early deadline will receive the total amount less the early premium.

The issuer also will pay accrued interest to but excluding the settlement date.

Chesapeake said it reserves the right to modify the tender caps without extending the early deadline or withdrawal deadline.

In accepting tenders for purchase, the company said it will give priority to notes tendered before the early deadline regardless of priority levels.

If the offers are fully subscribed by the early deadline, no more notes will be accepted for purchase in the offers, the company added.

The offers do not contain a minimum tender condition but do require that Chesapeake net proceeds of at least $500 million from a concurrent private offering of senior notes, the release added.

Morgan Stanley & Co. LLC (800 624-1808 or 212 761-1057) is the dealer manager. Global Bondholder Services Corp. (866 470-4200 or 212 430-3774) is the depositary and the information agent.

Chesapeake Energy is an Oklahoma City-based oil and gas producer.

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