Chesapeake Energy Corporation has voluntarily filed for Chapter 11 safety within the U.S. Bankruptcy Court for the Southern District of Texas to facilitate a complete steadiness sheet restructuring. Chesapeake intends to make use of the proceedings to strengthen its steadiness sheet and restructure its legacy contractual obligations to realize a extra sustainable capital construction. Chesapeake will function within the bizarre course through the Chapter 11 course of.
Chesapeake entered right into a Restructuring Support Agreement (RSA) with 100% of the lenders below its revolving credit score facility, holders of roughly 87% of the obligations below its Term Loan Agreement, roughly 60% of its senior secured second lien notes due 2025, and roughly 27% of its senior unsecured notes, pursuant to which Chesapeake will implement a Chapter 11 plan of reorganization to eradicate roughly $7 billion of debt.
As a part of the RSA, the Company has secured $925 million in debtor-in-possession (DIP) financing from sure lenders below Chesapeake’s revolving credit score facility, which will probably be out there upon Court approval. The financing bundle will present Chesapeake the capital essential to fund its operations through the Court-supervised Chapter 11 reorganization proceedings. The Company and sure lenders below Chesapeake’s revolving credit score facility have additionally agreed to the principal phrases of a $2.5 billion exit financing, consisting of a brand new $1.75 billion revolving credit score facility and a brand new $750 million time period mortgage. Additionally, the Company has the assist of its time period mortgage lenders and secured be aware holders to backstop a $600 million rights providing upon exit.
Doug Lawler, Chesapeake’s President and Chief Executive Officer, said, “We are basically resetting Chesapeake’s capital construction and enterprise to handle our legacy monetary weaknesses and capitalize on our substantial operational strengths. By eliminating roughly $7 billion of debt and addressing the legacy contractual obligations which have hindered our efficiency, we’re positioning Chesapeake to capitalize on our various working platform and confirmed observe report of bettering capital and working efficiencies and technical excellence. With these demonstrated strengths, and the advantage of an appropriately sized capital construction, Chesapeake will probably be uniquely positioned to emerge from the Chapter 11 course of as a stronger and extra aggressive enterprise.”
Headquartered in Oklahoma City, Chesapeake Energy Corporation’s operations are centered on discovering and creating its massive and geographically various useful resource base of unconventional oil and pure fuel belongings onshore within the United States.
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