Chesapeake Energy has engaged JPMorgan Chase Bank, Morgan Stanley Bank, Bank of America, and MUFG Bank to arrange a secured first lien last out 4.5-year term loan facility in the aggregate principal amount of up to $1.5 billion.
Chesapeake intends to use the net proceeds of the loan to finance a tender offer and consent solicitation for unsecured notes issued by Brazos Valley Longhorn and Brazos Valley Longhorn Finance, each a wholly owned subsidiary of Chesapeake, and to fund the retirement of Brazos Valley’s existing secured revolving credit facility.
Chesapeake expects these transactions to improve its financial flexibility, as they will allow Brazos Valley and its subsidiaries to support Chesapeake’s current and future debt.
The loan will be from one or more commercial banks, and will be secured by the same collateral securing Chesapeake’s existing revolving credit facility (with a position in the collateral proceeds waterfall junior to the revolving credit facility).
Amounts borrowed under the new term loan facility 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, including Brazos Valley and its subsidiaries upon the closing of the term loan facility.
Chesapeake’s ability to establish the new term loan facility and borrow thereunder will be subject to the receipt of commitments from lenders to provide the term loan facility, the negotiation and execution of definitive loan documents, the success of the consent solicitation and other customary conditions.
Headquartered in Oklahoma City, Chesapeake Energy’s operations are focused on discovering and developing its large and geographically diverse resource base of unconventional oil and natural gas assets onshore in the U.S.
