Chesapeake lifts unsecured loan to $4 billion, tightens OID to 97

By Sara Rosenberg

New York, May 15 - Chesapeake Energy Corp. increased its unsecured term loan due Dec. 2, 2017 to $4 billion from $3 billion and moved the original issue discount to 97 from 96, according to a market source.

Lead arrangers and bookrunners, Goldman Sachs & Co. and Jefferies Finance LLC, began marketing the loan on Monday after funding it on Friday, the source said. There was no bank meeting.

Commitments were due on Tuesday.

As was previously reported, pricing on the loan through Dec. 31 is Libor plus 700 basis points with a 1.5% Libor floor.

If, prior to Jan. 1, 2013, the company uses proceeds from certain asset sales or financing transaction to repay revolver debt, then pricing on the term loan will increased to Libor plus 800 bps.

Furthermore, if any amounts remain outstanding under the term loan following Jan. 1, 2013, then the pricing will increase to Libor plus 1,000 bps.

On and after May 11, 2013, the lenders will have the option to exchange their loans for 11½% fixed-rate notes.

Proceeds are being used to repay borrowings under the company's revolving credit facility.

During the remainder of the year, the company plans to complete asset sales totaling $9 billion to $11.5 billion and expects to use a portion of the proceeds from the asset sales to repay the loan.

Chesapeake said in an 8-K recently filed with the Securities and Exchange Commission that it has received strong interest from prospective buyers of its Permian Basin asset sales process and its Mississippi Lime joint venture process, and the hope is to close on a sales during the third quarter.

Chesapeake Energy is an Oklahoma City-based producer of natural gas as well as oil and natural gas liquids, and a driller of new wells.

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