Chesapeake Energy (NYSE:CHK), long rumored to be seeking to file for bankruptcy, formally commenced the process after filing Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas, the co. said Sunday.
The energy co. entered a Restructuring Support Agreement with all its lenders under its revolving credit facility, holders of approximately 87% of the obligations under its Term Loan Agreement, approximately 60% of its senior secured second-lien notes due 2025, and approximately 27% of its senior unsecured notes in efforts to reorganize to eliminate $7 billion in debt.
Chesapeake secured $925 million in debtor-in-possession financing to fund operations, and agreed with lenders to terms of a $2.5 billion exit financing, "consisting of a new $1.75 billion revolving credit facility and a new $750 million term loan. Additionally, the Company has the support of its term loan lenders and secured note holders to backstop a $600 million rights offering upon exit," the co. added.
Doug Lawler, President and CEO, stated, "we are pleased to have the support of our term loan lenders and secured note holders to backstop a $600 million rights offering, demonstrating their confidence in Chesapeake's operating platform and future."
