Chesapeake Energy Corporation commences voluntary Chapter 11 processChristian Fernsby ▼ | June 29, 2020
Chesapeake Energy Corporation announced that the Company has voluntarily filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas to facilitate a comprehensive balance sheet restructuring.
Chapter 11 Chesapeake Energy
Topics: Chesapeake Chapter 11
Chesapeake will operate in the ordinary course during the Chapter 11 process.
Chesapeake entered into a Restructuring Support Agreement ("RSA") with 100% of the lenders under its revolving credit facility, holders of approximately 87% of the obligations under its Term Loan Agreement, approximately 60% of its senior secured second lien notes due 2025, and approximately 27% of its senior unsecured notes, pursuant to which Chesapeake will implement a Chapter 11 plan of reorganization to eliminate approximately $7 billion of debt.
As part of the RSA, the Company has secured $925 million in debtor in possession ("DIP") financing from certain lenders under Chesapeake's revolving credit facility, which will be available upon Court approval.
The financing package will provide Chesapeake the capital necessary to fund its operations during the Court-supervised Chapter 11 reorganization proceedings.
The Company and certain lenders under Chesapeake's revolving credit facility have also agreed to the principal terms of a $2.5 billion exit financing, consisting of a new $1.75 billion revolving credit facility and a new $750 million term loan.
Additionally, the Company has the support of its term loan lenders and secured note holders to backstop a $600 million rights offering upon exit. ■