KLR Sees Chesapeake's (CHK) Debt-for-Equity Swap Having Minor Negative Impact; Affirms at 'Buy'
KLR Affirms Chesapeake (NYSE: CHK) with a Buy rating and $7 price target amid a recent dent-for-equity exchange arrangement.
ANalyst John Gerdes commented, Minor Debt For Equity Exchange (Minor Negative Value Impact) – Chesapeake announced it has agreed to exchange ~$125 million in outstanding 7.25% Senior Notes due 2018, Floating Rate Senior Notes due 2019, 6.125% Senior Notes due 2021, 5.375% Senior Notes due 2021, 4.875% Senior Notes due 2022, and 2.25% Contingent Convertible Notes due 2038 for ~22 million newly issued common shares (~$5.69 per share implied equity value). The exchange increases the company’s shares outstanding ~3%, while ’16 net-debt to EBITDA decreases from ~10.1x to ~10x. The debt for equity exchange should have a minor negative value impact.
For an analyst ratings summary and ratings history on Chesapeake Energy click here. For more ratings news on Chesapeake Energy click here.