UBS Maintains a 'Neutral' on Chesapeake Energy (CHK); Bridge Loan Offers Extra Time and Flexibility

UBS maintains a 'Neutral' on Chesapeake Energy (NYSE: CHK) price target of $16.00.

Analyst, William A. Featherston, said, "CHK fell 14% on 5/11 as its 10-Q stated it may “delay one or more of currently planned asset monetizations…in order to maintain our compliance” w/ its credit facility...The debt costs a minimum of Libor +7% (8.5% currently) and can be paid back at par if repaid by YE12. Importantly, the loan does not have the less than 4x debt/EBITDA maintenance covenant, and will be used to pay down the $2.46bn outstanding under its $4.0bn credit facility. This enables CHK more time & flexibility to execute the remaining $9-10.5bn in planned asset sales."

However, Featherston, thinks that the GS loan only offers more time and flexibility, but sees limitations to reducing capex requiring timely, large asset sales.

For an analyst ratings summary and ratings history on Chesapeake Energy click here. For more ratings news on Chesapeake Energy click here.

Shares of Chesapeake Energy closed at $14.81 yesterday.

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