OKLAHOMA CITY, Dec. 10, 2019 /PRNewswire/ -- Chesapeake
Energy Corporation (NYSE: CHK) ("Chesapeake" or the "Company")
announced today an amendment to its previously announced cash
tender offer and consent solicitation (the "Tender Offer"), on
behalf of its wholly owned subsidiaries Brazos Valley Longhorn,
L.L.C. ("BVL") and Brazos Valley Longhorn Finance Corp. (together
with BVL, the "Issuers"), for the 6.875% Senior Notes due 2025 (the
"Notes") issued by the Issuers. The Tender Offer, which is subject
to certain terms and conditions set forth in the Offer to Purchase
and Consent Solicitation Statement dated December 4, 2019 (the "Offer to Purchase"), has
been amended to increase the tender offer consideration from
$920.00 per $1,000 principal amount of Notes validly tendered
and accepted for purchase in the Tender Offer to $950.00 per $1,000
principal amount of Notes validly tendered and accepted for
purchase in the Tender Offer. As a result of this increase in the
tender offer consideration, the New Total Consideration (defined
below), in respect of Notes that are validly tendered at or prior
to the Early Tender Date (defined below), is $1,000 per $1,000
principal amount of Notes validly tendered and accepted for
purchase in the Tender Offer.
As previously disclosed, concurrently with the Tender Offer,
Chesapeake is conducting, on behalf of the Issuers, a simultaneous
solicitation of consents (the "Consent Solicitation") from each
registered holder (individually, a "Holder" and, collectively, the
"Holders") of the Notes with respect to certain proposed amendments
(the "Proposed Amendments") to the indenture governing the Notes
(the "Existing Indenture"). If Holders of the Notes validly tender
their Notes in the Tender Offer, they will be deemed to have
validly delivered their related consents, with respect to the
principal amount of such tendered Notes, to the Proposed Amendments
(the "Consents"). A Holder may not deliver Consents without
tendering the related Notes pursuant to the Tender Offer and may
not tender Notes without delivering the related Consents pursuant
to the Consent Solicitation. The supplemental indenture (the
"Supplemental Indenture") containing the Proposed Amendments would
amend the Existing Indenture to, among other things, eliminate
substantially all of the restrictive covenants, certain events of
default and certain other provisions currently applicable to the
Notes.
Chesapeake also announced today that Holders representing at
least a majority of the outstanding aggregate principal amount of
the Notes have committed to tender their Notes and deliver the
related Consents in the Tender Offer at or prior to the Early
Tender Date. The Company therefore expects that Notes that are not
validly tendered pursuant to the Tender Offer for any reason will
be bound by the Proposed Amendments and will no longer be entitled
to the benefits of substantially all of the restrictive covenants,
certain events of default and certain other provisions contained in
the Existing Indenture. In addition, under the circumstances
described in the Offer to Purchase, including the satisfaction of
the financing condition described below, the Notes will no longer
be effectively senior to all of the Company's existing and future
unsecured senior indebtedness with respect to the assets of the
Issuers and their subsidiaries and will be effectively subordinated
to claims of holders of the Company's secured indebtedness to the
extent of the value of the collateral securing such
indebtedness.
Except as provided for in this release, all other terms and
conditions of the Tender Offer and Consent Solicitation remain
unchanged as set forth in an Offer to Purchase and the related
Letter of Transmittal and Consent (the "Letter of
Transmittal").
The following table sets forth the amended pricing terms of the
Tender Offer.
Series of
Notes
|
CUSIP
Number
|
Aggregate
Principal Amount
Outstanding
|
New Tender
Offer
Consideration(1)
|
Early Tender
Premium(1)
|
New Total
Consideration(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
6.875% Senior Notes
due 2025
|
96812TAB8
|
$617,810,000
|
$950.00
|
$50.00
|
$1,000.00
|
|
|
|
|
|
|
|
|
(1)
|
Per $1,000 principal
amount of Notes validly tendered and accepted for purchase in the
Tender Offer (exclusive of any Accrued Interest (as defined below),
which will be paid in addition to the New Tender Offer
Consideration or the New Total Consideration, as applicable, to,
but not including, the applicable Settlement Date (as defined
below)).
|
|
|
(2)
|
Includes the Early
Tender Premium (as defined below).
|
The Tender Offer and Consent Solicitation will expire at
11:59 p.m., New York City time, on January 6, 2020, or any other date and time to
which Chesapeake extends the Tender Offer and Consent Solicitation
(such date and time, as it may be extended, the "Expiration Date"),
unless earlier terminated. Holders who have previously validly
tendered and not validly withdrawn their Notes (and related
Consents) do not need to re-tender their Notes (and related
Consents) or take any other action in response to the amendment of
the Tender Offer. No tenders of Notes and deliveries of related
Consents will be valid if submitted after the Expiration Date.
Tendered Notes may be validly withdrawn, and delivered Consents may
be validly revoked, at or prior to, but not after, 5:00 p.m., New York
City time, on December 19,
2019 (such date and time with respect to the Tender Offer
and Consent Solicitation, as it may be extended, the "Withdrawal
Deadline"), except for certain limited circumstances where
additional withdrawal or revocation rights are required by law.
After the Withdrawal Deadline, Notes tendered prior to the
Expiration Date (whether tendered prior to, at or after the
Withdrawal Deadline) may not be withdrawn, and related Consents may
no longer be revoked, unless Chesapeake is required to extend
withdrawal or revocation rights under applicable law.
Subject to the terms and conditions of the Tender Offer and
Consent Solicitation, the consideration for each $1,000 principal amount of Notes validly tendered
(with Consents that have been validly delivered) and accepted for
purchase pursuant to the Tender Offer will be the tender offer
consideration for the Notes set forth in the table above (the "New
Tender Offer Consideration"). Holders of Notes that are validly
tendered (with Consents that have been validly delivered) at or
prior to 5:00 p.m., New York City time, on December 19, 2019 (such date and time, as it may
be extended, the "Early Tender Date") and accepted for purchase
pursuant to the Tender Offer will receive the total consideration
for the Notes set forth in the table above (the "New Total
Consideration"), which consists of the New Tender Offer
Consideration plus the early tender premium for the Notes as set
forth in the table above (the "Early Tender Premium"). Holders of
Notes validly tendered (with Consents that have been validly
delivered) after the Early Tender Date, but at or prior to the
Expiration Date, and accepted for purchase pursuant to the Tender
Offer will receive the New Tender Offer Consideration, but not the
Early Tender Premium for the Notes. No tenders of Notes will be
valid if submitted after the Expiration Date.
In addition to the New Tender Offer Consideration or the New
Total Consideration, as applicable, Chesapeake will pay in cash
accrued and unpaid interest on the Notes accepted for purchase in
the Tender Offer from the latest interest payment date to, but not
including, the applicable Settlement Date (as defined below)
("Accrued Interest") (subject to the right of Holders on the
relevant record date to receive interest due on the relevant
interest payment date).
Chesapeake reserves the right, in its sole discretion, at any
point following the Early Tender Date and prior to the Expiration
Date, to accept for purchase any Notes validly tendered (with
Consents that have been validly delivered) at or prior to the Early
Tender Date (the date of such acceptance and purchase, the "Early
Settlement Date"). The Early Settlement Date will be determined at
Chesapeake's option, assuming the conditions to the Tender Offer
and Consent Solicitation have been either satisfied or, in certain
circumstances, waived by Chesapeake at or prior to the Early
Settlement Date. If Chesapeake elects to have an Early Settlement
Date, it will accept Notes validly tendered (with Consents that
have been validly delivered) at or prior to the Early Tender Date.
Promptly following the Expiration Date, Chesapeake will accept for
purchase any Notes that have been validly tendered (with Consents
that have been validly delivered) (i) at or prior to the Early
Tender Date if no Early Settlement Date shall have occurred and
(ii) after the Early Tender Date but at or prior to the Expiration
Date, subject to all conditions to the Tender Offer and Consent
Solicitation having been either satisfied or, in certain
circumstances, waived by Chesapeake at or prior to the Expiration
Date (the date of such acceptance and purchase, the "Final
Settlement Date"; the Final Settlement Date and the Early
Settlement Date each being a "Settlement Date").
The Tender Offer and Consent Solicitation is subject to, and
conditioned upon, the satisfaction or, in certain circumstances,
waiver of certain conditions described in the Offer to Purchase,
including (i) Chesapeake receiving Consents from Holders of a
majority in aggregate principal amount of the outstanding Notes at
or prior to the Early Tender Date (the "Requisite Consents
Condition") and (ii) Chesapeake obtaining committed financing from
one or more banks, investment banks, insurance companies, mutual
funds or other institutional lenders for floating rate term loans
aggregating $1.5 billion with funding
to occur concurrently with the first Settlement Date.
If the Requisite Consents Condition is satisfied, the Issuers
intend to execute the Supplemental Indenture to the Existing
Indenture with U.S. Bank National Association, the Trustee under
the Existing Indenture (the "Trustee"), containing the Proposed
Amendments, which would, among other things, eliminate
substantially all of the restrictive covenants, certain events of
default and certain other provisions currently applicable to the
Notes. The Supplemental Indenture will become effective upon
execution, but will provide that the Proposed Amendments will not
become operative until the first Settlement Date; provided that
Chesapeake purchases in the Tender Offer at least a majority in
aggregate principal amount of the outstanding Notes on such
Settlement Date.
The Tender Offer and Consent Solicitation is being made in
connection with a concurrent secured term loan financing and a
concurrent offer to exchange Chesapeake's 8.00% Senior Notes due
2027, 8.00% Senior Notes due 2026, 8.00% Senior Notes due 2025,
7.50% Senior Notes due 2026 and 7.00% Senior Notes due 2024
(collectively, the "CHK Old Notes") for new 11.5 % Senior Secured
Second Lien Notes due 2025 (the "Second Lien Notes") to be issued
by Chesapeake (the "Chesapeake Exchange Offers"). The Tender Offer
and Consent Solicitation is not contingent or conditioned upon the
completion of the Chesapeake Exchange Offers.
J.P. Morgan Securities LLC is acting as the dealer manager and
solicitation agent in the Tender Offer and Consent
Solicitation. Global Bondholder Services Corporation has been
retained to serve as both the depositary and the information agent
for the Tender Offer and Consent Solicitation. Persons with
questions regarding the Tender Offer and Consent Solicitation
should contact J.P. Morgan Securities LLC at (212) 834-3424
(collect) or (866) 834-4666 (toll-free). Requests for copies
of the Offer to Purchase, the related Letter of Transmittal and
other related materials should be directed to Global Bondholder
Services Corporation at (toll-free) (866) 470-4300 or (collect)
(212) 430-3774.
None of Chesapeake, the Issuers, their respective boards of
directors or managers, as applicable, or officers, the dealer
manager and solicitation agent, the depositary and information
agent, the Trustee or any affiliate of any of them makes any
recommendation as to whether any Holder should tender or refrain
from tendering all or any portion of the principal amount of such
Holder's Notes for purchase in the Tender Offer and deliver the
related Consents in the Consent Solicitation. No one has been
authorized by any of them to make such a recommendation.
Holders must make their own decision as to whether to participate
in the Tender Offer and Consent Solicitation and, if so, the amount
of Notes as to which action is to be taken. The Tender Offer
and Consent Solicitation are made only by the Offer to Purchase and
related Letter of Transmittal. This press release is neither
an offer to purchase nor a solicitation of an offer to sell any
Notes in the Tender Offer or any CHK Old Notes in the Chesapeake
Exchange Offers. In addition, this press release is neither
an offer to sell nor a solicitation of an offer to purchase any
Second Lien Notes in the Chesapeake Exchange Offers. Neither the
Tender Offer and Consent Solicitation nor the Chesapeake Exchange
Offers are being made to holders in any jurisdiction in which the
making or acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. In
any jurisdiction in which the Tender Offer and Consent Solicitation
are required to be made by a licensed broker or dealer, the Tender
Offer and Consent Solicitation will be deemed to be made on behalf
of Chesapeake by the dealer manager or one or more registered
brokers or dealers that are licensed under the laws of such
jurisdiction.
Headquartered in Oklahoma
City, Chesapeake Energy Corporation's (NYSE: CHK) operations
are focused on discovering and developing its large and
geographically diverse resource base of unconventional oil and
natural gas assets onshore in the United
States.
This news release includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including the
timing of the settlement and the results of the proposed Tender
Offer and Consent Solicitation and the execution of the
Supplemental Indenture. Forward-looking statements are statements
other than statements of historical fact. Although we believe the
expectations and forecasts reflected in the forward-looking
statements are reasonable, we can give no assurance they will prove
to have been correct. They can be affected by inaccurate or changed
assumptions or by known or unknown risks and uncertainties.
Factors that could cause actual results to differ materially from
expected results include our ability to comply with the covenants
under our revolving credit facilities and other indebtedness and
the related impact on our ability to continue as a going concern,
the volatility of oil, natural gas and NGL prices and other factors
described under "Risk Factors" in Item 1A of our annual report on
Form 10-K and any updates to those factors set forth in
Chesapeake's subsequent quarterly reports on Form 10-Q or current
reports on Form 8-K.
INVESTOR
CONTACT:
|
MEDIA
CONTACT:
|
Brad Sylvester,
CFA
(405)
935-8870
ir@chk.com
|
Gordon
Pennoyer
(405)
935-8878
media@chk.com
|
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SOURCE Chesapeake Energy Corporation