OKLAHOMA CITY--(BUSINESS WIRE)--May. 15, 2012-- Chesapeake Energy Corporation (NYSE:CHK) today announced it has increased the size of a previously announced unsecured term loan from Goldman Sachs Bank USA and affiliates of Jefferies Group, Inc. from $3.0 billion to $4.0 billion based on strong investor demand. The loan was syndicated to a large group of institutional investors and priced at 97% of par. The net proceeds of the loan to Chesapeake, after customary fees and syndication costs, of approximately $3.8 billion will be used to repay borrowings under the company’s existing corporate revolving credit facility and for general corporate purposes. The loan carries an initial variable annual interest rate through December 31, 2012 of LIBOR plus 7.0%, which is currently 8.5% given the 1.5% LIBOR floor in the loan agreement. The loan, which ranks pari passu with Chesapeake’s outstanding senior notes, matures on December 2, 2017 and may be repaid at any time in 2012 without penalty at par value.
Chesapeake expects to use a portion of the proceeds from planned asset sales to repay the loan in full before the end of 2012. Giving effect to the increase in the size of the loan, the company currently has more than $4.7 billion of liquidity including unrestricted cash on hand and available borrowing capacity under its revolving bank credit facilities.
Aubrey K. McClendon, Chairman and Chief Executive Officer, said, “We appreciate this strong vote of confidence from investors. As discussed in yesterday’s conference call, this will give us greatly enhanced financial flexibility to execute our planned asset sales from a position of strength and to complete our transformation from a natural gas-focused producer to a more balanced liquids-focused producer.”