Summary
Chesapeake Energy Corporation (Chesapeake) announced the completion of the spin-off of its oilfield services business, formerly Chesapeake Oilfield Operating, L.L.C. (COO), into a new, independent publicly traded company named Seventy Seven Energy Inc. (SSE). This separation was executed through a stock distribution where Chesapeake shareholders received one share of SSE for every fourteen shares of Chesapeake common stock held as of June 19, 2014. Key agreements governing the separation, including a Master Separation Agreement, Tax Sharing Agreement, and Employee Matters Agreement, have been finalized. These agreements define the terms of the spin-off and outline the future relationship between Chesapeake and SSE. Additionally, SSE, independently, secured $500 million in 6.5% Senior Notes due 2022 and entered into asset-backed lending and term loan facilities, relieving Chesapeake of any obligations related to these new SSE debt arrangements.
Key Highlights
- 1Completion of spin-off of oilfield services business into Seventy Seven Energy Inc. (SSE).
- 2Shareholders received 1 share of SSE for every 14 shares of Chesapeake held as of June 19, 2014.
- 3Definitive agreements (Master Separation, Tax Sharing, Employee Matters) finalized between Chesapeake and SSE.
- 4SSE independently issued $500 million of 6.5% Senior Notes due 2022.
- 5SSE entered into asset-backed lending and term loan facilities.
- 6Chesapeake is absolved of all obligations related to SSE's new debt arrangements.
- 7The spin-off aims to create a stand-alone, publicly traded entity for the oilfield services segment.