Chesapeake Energy (CHK) Prices $1.5B Term Loan Facility

August 17, 2016 6:06 AM EDT

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Chesapeake Energy Corporation (NYSE: CHK) announced that it successfully priced its proposed term loan and, as a result of strong demand, has upsized the term loan to $1.5 billion from a previously announced size of $1.0 billion. The term loan is being arranged by Goldman Sachs Bank USA, Citigroup Global Markets Inc. and MUFG as joint lead arrangers. Chesapeake intends to use the net proceeds of the loan to finance tender offers for its unsecured notes, with any remaining proceeds used for further debt repayments and other general corporate purposes. Chesapeake expects this financing and the tender offers to improve its financial flexibility by reducing its near-term maturing debt.

The loan will have a five-year term and bear interest at a rate of LIBOR plus 7.50% per annum, subject to a 1.00% LIBOR floor. The loan will be made at par without original issue discount. The loan will be secured by the same collateral securing the company's revolving credit facility (with a position in the collateral proceeds waterfall junior to the credit facility).

The new term loan will be unconditionally guaranteed on a joint and several basis by Chesapeake's direct and indirect wholly owned domestic subsidiaries that are guarantors under the company's revolving credit facility.

The loan is expected to close on or before August 23, 2016, subject to customary closing conditions and final documentation.

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