8-KMaterial AgreementsFinancial EventsSecurities & Listing+1

EXPAND ENERGY Corp 8-K Report, Material Agreement (Nov 15, 2005)

Filed November 15, 2005For Securities:EXEEXEELEXEEWEXEEZ

Summary

Chesapeake Energy Corporation (EXE) filed this 8-K on November 15, 2005, to report the entry into material definitive agreements related to its financing activities. Specifically, the company issued two series of senior notes and preferred stock. This filing details the terms of a $500 million issuance of 6.875% Senior Notes due 2020 and a $690 million issuance of 2.75% Contingent Convertible Senior Notes due 2035. These issuances were conducted through private placements under Section 4(2) of the Securities Act, with an exemption for transactions not involving a public offering. The company also issued 5,750,000 shares of 5% Cumulative Convertible Preferred Stock (Series 2005B). Registration rights agreements were established for all these securities, obligating Chesapeake Energy to file registration statements with the SEC to allow for the resale of these securities and any common stock issuable upon conversion. Failure to comply with these registration rights agreements could result in additional interest or dividends being paid.

Key Highlights

  • 1Chesapeake Energy issued $500 million in 6.875% Senior Notes due 2020.
  • 2Chesapeake Energy issued $690 million in 2.75% Contingent Convertible Senior Notes due 2035.
  • 3Chesapeake Energy issued 5,750,000 shares of 5% Cumulative Convertible Preferred Stock (Series 2005B).
  • 4All securities were issued via private placements under Section 4(2) of the Securities Act.
  • 5Registration rights agreements were executed for all issuances, requiring the company to register the securities for resale.
  • 6Failure to meet registration rights obligations may result in additional interest payments on the notes or increased dividends on the preferred stock.
  • 7The Senior Notes and Convertible Notes are senior unsecured obligations, guaranteed by existing and future domestic subsidiaries, but subordinated to secured debt.

Frequently Asked Questions

The main financial events reported are the issuance of $500 million of 6.875% Senior Notes due 2020, $690 million of 2.75% Contingent Convertible Senior Notes due 2035, and 5,750,000 shares of 5% Cumulative Convertible Preferred Stock (Series 2005B). These were conducted through private placements.

The 6.875% Senior Notes are due November 15, 2020, and accrue interest at 6.875% payable semi-annually. The 2.75% Contingent Convertible Senior Notes are due November 15, 2035, with a base interest rate of 2.75% and potential for contingent interest. Both note issuances include various events of default and covenants, and are senior unsecured obligations.

The 2.75% Contingent Convertible Senior Notes are convertible into cash and, if applicable, shares of common stock at an initial rate of approximately 25.5951 shares per $1,000 principal, under specific conditions related to stock price and time. The 5% Cumulative Convertible Preferred Stock is convertible into 2.5595 shares of common stock per share at the holder's option, and is subject to mandatory conversion by the company under certain conditions after November 15, 2010.

The registration rights agreements obligate Chesapeake Energy to file registration statements with the SEC to allow holders to resell the issued notes and preferred stock, and any common stock issued upon conversion. This process is intended to remove restrictions on resale. If the company fails to meet its obligations under these agreements within specified timelines, it may be required to pay additional interest on the notes or increased dividends on the preferred stock.