Summary
Chesapeake Energy Corporation (EXE) filed an 8-K report on December 16, 2015, detailing a significant amendment to its senior revolving credit agreement. The primary change involves an increase in the permitted junior lien debt basket, doubling it from $2.0 billion to $4.0 billion, with potential for further expansion under specific financial conditions. This amendment, effective December 15, 2015, was entered into with MUFG Union Bank N.A. and Wells Fargo Bank, National Association, among other lenders. This move signals the company's strategy to enhance its financial flexibility by enabling the issuance of more junior lien debt. The conditions for further increases emphasize maintaining net annual cash interest expense within a specified limit ($75 million) and completing substantial debt exchanges for senior notes maturing between 2017 and 2019. The report also references a press release regarding private exchange offers for outstanding senior notes, underscoring ongoing efforts to manage its debt profile.
Key Highlights
- 1Chesapeake Energy entered into a second amendment to its senior revolving credit agreement on December 15, 2015.
- 2The permitted junior lien debt basket was increased from $2.0 billion to $4.0 billion.
- 3Further increases to the junior lien debt basket are possible upon meeting certain financial conditions.
- 4Key conditions for increased junior lien debt include limiting net annual cash interest expense to $75 million and exchanging over $2.0 billion in senior notes.
- 5The total commitment under the Credit Agreement remains $4.0 billion, but may be reduced after April 15, 2016, based on junior lien debt issuances.
- 6The company also issued a press release on December 16, 2015, concerning its private exchange offers for outstanding senior notes.
- 7MUFG Union Bank N.A. and Wells Fargo Bank, National Association, acted as administrative/co-syndication agents and lenders.