Chesapeake Energy lifts term loan to $1.5 billion, sets pricing

By Sara Rosenberg

New York, Aug. 16 – Chesapeake Energy Corp. upsized its five-year first-lien last-out term loan (Caa1/B-) to $1.5 billion from $1 billion and firmed pricing at Libor plus 750 basis points, the low end of the Libor plus 750 bps to 775 bps talk that first emerged on Tuesday morning, according to a market source.

In addition, the issue price on the loan was changed to par from 99, the source said.

The term loan still has a 1% Libor floor and is non-callable for two years, then at par plus 50% of the coupon in year three and at par plus 25% of the coupon in year four.

The un-swapped equivalent all-in yield is 8½%, versus about 8¾% to 9% based on initial price talk, the source said.

Security for the term loan is the same collateral securing the company’s revolving credit facility, with a position in the collateral proceeds waterfall junior to the credit facility.

Books closed at 2:30 p.m. ET on Tuesday, the source added.

Goldman Sachs Bank USA, Citigroup Global Markets Inc. and MUFG are the joint bookrunners on the deal that launched with a lender call on Monday.

Proceeds will be used to fund tender offers for convertible notes and senior notes.

The tender offers will expire on Sept. 12.

Chesapeake Energy is an Oklahoma City-based producer of natural gas, oil and natural gas liquids.

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