8-KMaterial AgreementsFinancial EventsRegulation FD+2

EXPAND ENERGY Corp 8-K Report, Material Agreement (Jun 29, 2020)

Filed June 29, 2020For Securities:EXEEXEELEXEEWEXEEZ

Summary

Chesapeake Energy Corporation (the "Company") announced on June 29, 2020, that it, along with certain subsidiaries, entered into a Restructuring Support Agreement (RSA) on June 28, 2020, with certain holders of its debt obligations. This agreement is intended to support a comprehensive restructuring of the Company's balance sheet. Concurrently with the RSA, the Company voluntarily filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of Texas. The Company will operate as a debtor-in-possession and has secured a commitment for a $925 million debtor-in-possession (DIP) credit facility. This DIP facility, upon meeting certain conditions, can convert into a larger exit facility. The RSA outlines the proposed treatment for various creditor classes, with existing equity holders expected to receive no recovery.

Key Highlights

  • 1Chesapeake Energy Corporation has entered into a Restructuring Support Agreement (RSA) with key stakeholders to facilitate a financial restructuring.
  • 2The Company has filed for Chapter 11 bankruptcy protection as part of its restructuring plan.
  • 3A commitment for a $925 million DIP credit facility has been secured to provide liquidity during the Chapter 11 process.
  • 4The RSA details the proposed recovery for various classes of debt holders, including secured claims, revolving credit facility claims, term loan facility claims, and noteholders.
  • 5Holders of Chesapeake's common stock are expected to experience a significant or complete loss of their investment as part of the restructuring.
  • 6The Company will continue to operate its business as a debtor-in-possession under court supervision.
  • 7The DIP credit facility may convert into a larger Exit Credit Facility upon satisfaction of certain conditions.

Frequently Asked Questions

This 8-K filing announces that Chesapeake Energy Corporation has entered into a Restructuring Support Agreement (RSA) and has voluntarily filed for Chapter 11 bankruptcy protection. The RSA outlines a plan for the company's financial restructuring.

The RSA is an agreement between Chesapeake and certain debt holders to support a restructuring of the company's balance sheet. It outlines how various classes of creditors will be treated under a proposed plan of reorganization. It also includes provisions for voting on the plan and limitations on alternative transactions.

The Chapter 11 filing allows Chesapeake to continue operating its business while it restructures its debts under court supervision. This process aims to resolve the company's financial challenges and emerge as a more viable entity.

According to the filing, existing equity holders of Chesapeake are expected to have their interests cancelled and extinguished, with no distribution. This means they are likely to experience a significant or complete loss on their investment.

The DIP Credit Facility is a $925 million credit facility committed by certain lenders to provide Chesapeake with essential liquidity during its Chapter 11 proceedings. This funding will support the company's operations, administrative costs, and other expenses during the restructuring process.