Chesapeake Energy wraps oversubscribed tender for 10 series of notes

By Susanna Moon

Chicago, Sept. 27 – Chesapeake Energy Corp. said investors had tendered $933.3 million of notes in the capped offer for 10 series of its notes, which had been oversubscribed as of the early deadline.

Chesapeake accepted for purchase about $897.7 million of notes tendered by 5 p.m. ET on Aug. 25, the early tender date, for a total purchase price of about $800 million, according to a company notice.

None of the notes tendered after the early deadline were accepted for purchase, the company noted.

The company began tendering for the notes on Aug. 15 with a total purchase price of $500 million and then on Sept. 13 increased the purchase price to $800 million.

Chesapeake accepted for purchase $897.7 million principal amount of notes tendered by the early deadline. The company said it would purchase the priority 3 notes on a prorated basis and no notes tendered after the early tender date.

As of the early deadline, the aggregate purchase price for the priority 2 notes tendered had exceeded the cap for these notes and the company previously said that it would purchase those notes on a prorated basis.

Then the company lifted the tender cap for the notes with maturities beginning 2019 to $610 million from $325 million and extended the tender until 11:59 p.m. ET on Sept. 26.

The early settlement date also was set for Sept. 14.

In the first set of offers, the company is offering to purchase

• Up to $400 million purchase price for the 6¼% euro-denominated senior notes due 2017, 6½% senior notes due 2017 and 7¼% senior notes due 2018, which are the priority 1 notes; and

• Up to $610 million purchase price of floating-rate senior notes due 2019, the priority 2 notes, and 6 5/8% senior notes due 2020, 6 7/8% senior notes due 2020, 6 1/8% senior notes due 2021, 5 3/8% senior notes due 2021, 4 7/8% senior notes due 2022 and 5¾% senior notes due 2023, the priority 3 notes.

In the end, investors had tendered €36,208,000 of the 6¼% notes, $82,725,000 of the 6½% notes and $71,267,000 of the 7¼% notes.

As of the original expiration, investors had tendered €36,208,000 of the 6¼% notes, $82,643,000 of the 6½% notes and $71,207,000 of the 7¼% notes.

The company accepted for purchase on the early settlement date €35,958,000 of the 6¼% notes, $82,374,000 of the 6½% notes and $70,968,000 of the 7¼% notes.

Holders also had tendered $444,467,000 of the floaters, $17.53 million of the 6 5/8% notes, $12,824,000 of the 6 7/8% notes, $34,305,000 of the 6 1/8% notes, $4,571,000 of the 5 3/8% notes, $173,845,000 of the 4 7/8% notes and $51.35 million of the 5¾% notes.

As of the original expiration, holders had tendered $444,417,000 of the floaters, $17,514,000 of the 6 5/8% notes, $12,824,000 of the 6 7/8% notes, $34.23 million of the 6 1/8% notes, $4,571,000 of the 5 3/8% notes, $173,845,000 of the 4 7/8% notes and $51.36 million of the 5¾% notes.

Chesapeake accepted for purchase on the early settlement date $444,322,000 of the floaters, $15,205,000 of the 6 5/8% notes, $11,116,000 of the 6 7/8% notes, $29,998,000 of the 6 1/8% notes, $3,907,000 of the 5 3/8% notes, $154,133,000 of the 4 7/8% notes and $45,538,000 of the 5¾% notes.

As of the early deadline, investors had tendered €36,158,000 of the 6¼% notes, $82,374,000 of the 6½% notes, $70,968,000 of the 7¼% notes, $444,322,000 of the floaters due 2019, $17,279,000 of the 6 5/8% notes, $12,598,000 of the 6 7/8% notes, $33,973,000 of the 6 1/8% notes, $4,441,000 of the 5 3/8% notes, $173,695,000 of the 4 7/8% notes and $51.35 million of the 5¾% notes.

The offer for the priority 3 notes have an additional cap that keeps the amount accepted for purchase from exceeding that of the priority 1 notes and priority 2 notes accepted for purchase under the tender offers and the convertible notes accepted for purchase in the concurrent tender offers.

The purchase price cap excludes accrued interest.

In the first set of offers, the total purchase price for each €1,000 or $1,000 will be as follows:

• Par for the €302,108,000 of outstanding 6¼% euro-denominated senior notes due 2017;

• Par for the $315,126,000 of outstanding 6½% senior notes due 2017;

• $995.00 for the $531,138,000 of outstanding 7¼% senior notes due 2018;

• $915.00 for the $948,501,000 of outstanding floating-rate senior notes due 2019;

• $845.00 for the $822,087,000 of outstanding 6 5/8% senior notes due 2020;

• $845.00 for the $302,163,000 of outstanding 6 7/8% senior notes due 2020;

• $812.50 for the $584,346,000 of outstanding 6 1/8% senior notes due 2021;

• $767.50 for the $276,171,000 of outstanding 5 3/8% senior notes due 2021;

• $752.50 for the $607,188,000 of outstanding 4 7/8% senior notes due 2022; and

• $762.50 for the $384,390,000 of outstanding 5¾% senior notes due 2023.

Each total purchase price includes a €30.00 or $30.00 early tender premium per €1,000 or $1,000 of notes tendered by the early tender date.

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

Chesapeake said it may purchase additional notes from time to time in the open market, in privately negotiated transactions, through tender or exchange offers or through redemptions.

Convertibles tender

Chesapeake also made separate tender offers on Aug. 15 for up to $500 million aggregate purchase price of its $730,205,000 of 2.5% contingent convertible senior notes due 2037 and $315,112,000 of 2.25% contingent convertible senior notes due 2038, listed in order of priority acceptance levels.

The tender offers for the contingent convertibles ended at 11:59 p.m. ET on Sept. 12, with settlement on Sept. 14.

Investors had tendered $790.4 million of the convertibles, consisting of tenders for $682,438,000 of the 2.5% convertibles and $107,954,000 of the 2.25% convertibles, according to a separate press release.

Chesapeake accepted for purchase $600 million principal amount of the 2.5% convertibles on a prorated basis for a purchase price of $600 million and all of the 2.25% convertibles for about $99.3 million, each excluding accrued interest.

On Aug. 26, the company increased the aggregate purchase price cap to $750 million and set a purchase price tender cap of $600 million for the 2.5% convertibles, according to a company update. The tender cap for the 2.25% convertibles remains unchanged.

The company previously said it will pay no more than $275 million, excluding accrued interest, for the 2.25% convertibles.

The purchase price for each $1,000 principal amount will be par for the 2.5% convertibles and $920.00 for the 2.25% convertibles.

Holders also will receive accrued interest to but excluding the settlement date.

The offers were not conditioned upon a minimum amount of notes being tendered but were contingent on Chesapeake securing enough proceeds from a concurrent secured term loan to fund the tender payment.

The company closed a $1.5 billion secured five-year term loan, which satisfies the funding condition.

Goldman Sachs & Co. (800 828-3182 or 212 902-6941) is the dealer manager for each offer. Global Bondholder Services Corp. (866 470-4200 or 212 430-3774) is the depositary and information agent.

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

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