8-KLeadership ChangesAcquisitions & DispositionsMaterial Agreements+5

EXPAND ENERGY Corp 8-K Report, Material Agreement (Feb 1, 2019)

Filed February 1, 2019For Securities:EXEEXEELEXEEWEXEEZ

Summary

This 8-K filing from EXPAND ENERGY Corp (EXE) on February 1, 2019, primarily announces the completion of the previously disclosed merger between Chesapeake Energy Corporation and WildHorse Resource Development Corporation. The merger has resulted in WildHorse being acquired by Chesapeake, with WildHorse shareholders receiving a combination of Chesapeake common stock and cash. This transaction fundamentally alters the capital structure and operational framework for the combined entities. Key financial events include amendments to existing credit agreements for both Chesapeake and WildHorse. Specifically, the Chesapeake credit facility now designates the merged entity (Surviving Company) and its subsidiaries as unrestricted, while the WildHorse credit facility has been amended to permit the merger and facilitate the redemption or repurchase of WildHorse Senior Notes under certain conditions. The Surviving Company has also assumed WildHorse's $700 million in Senior Notes, with a new co-issuer established. Investors should note the implications for debt servicing, covenants, and potential future obligations related to these notes and credit facilities.

Key Highlights

  • 1Completion of the merger between Chesapeake Energy Corporation and WildHorse Resource Development Corporation on February 1, 2019.
  • 2WildHorse shareholders received a mix of Chesapeake common stock and cash as merger consideration.
  • 3Amendments to both Chesapeake's and WildHorse's credit agreements to accommodate the merger and post-merger operations.
  • 4The Surviving Company has assumed WildHorse's $700 million of 6.875% Senior Notes due 2025, with a new co-issuer, Brazos Valley Longhorn Finance Corp., established.
  • 5The WildHorse Senior Notes are now senior unsecured obligations of the Surviving Company and its guarantors, ranking equally with other senior unsecured debt but effectively subordinated to senior secured debt.
  • 6The revolving credit facility for the merged entity has a maximum capacity of $2.0 billion, with $1.3 billion in current commitments and borrowing base.
  • 7David W. Hayes, a former WildHorse director, has been appointed to the Chesapeake Board of Directors and will receive standard director compensation and stock awards.

Frequently Asked Questions

The main event reported is the completion of the merger between Chesapeake Energy Corporation and WildHorse Resource Development Corporation on February 1, 2019. This means WildHorse has been acquired by Chesapeake.

WildHorse shareholders received, at their election, either a combination of Chesapeake common stock and cash, or a different ratio of Chesapeake common stock. This included cash in lieu of fractional shares.

The Surviving Company (the merged entity) has assumed WildHorse's $700 million in Senior Notes. These notes are now senior unsecured obligations of the Surviving Company and its guarantors. Additionally, the company entered into amendments on its credit facilities to reflect the merger and ongoing operations.

Yes, David W. Hayes, a former director of WildHorse, has been appointed to the Chesapeake Board of Directors as an independent director. He will receive standard compensation and stock grants for non-employee directors.