Chesapeake Energy Corporation (NYSE:CHK), the second largest producer of natural gas in the United States announced the new rate for its $2 billion unsecured five-year term facility loan, arranged by Bank of America Corp. (NYSE:BAC), Goldman Sachs Group, Inc. (NYSE:GS) and Jefferies Finance LLC.

Chesapeake Energy

The new loan facility will be offered to a large group of institutional investors, priced at P8 percent par. According to Chesapeake Energy Corporation (NYSE:CHK), the new rate for the amount borrowed will bear a LIBOR plus 4.50 percent interest under the new loan facility. The LIBOR rate is subject to a floor of 1.25 percent per year.

Chesapeake Energy Corporation (NYSE:CHK) said new the loan facility will mature on December 2, 2017, and it is not subject to payment on demand during the first year, but the company has the option to repay it voluntarily during the second or third year at par value, plus premium. Chesapeake may also repay the loan at par value anytime.

The new facility is expected to close on November 9, 2012, subject to the execution of definitive loan documents and the satisfaction of closing conditions.

According to Chesapeake, it will use the net proceeds of its new term loan facility to repay its remaining outstanding debts under its current May 2012 term loan facility. The company also plans to repay its outstanding debts under the company’s corporate revolving credit facility.

In addition, Chesapeake Energy Corporation (NYSE:CHK) stated that the new term loan facility will boost its liquidity and financial flexibility. The company is striving to achieve its objective to complete the sale of some of its assets to repay its costly debts. Chesapeake aims to reduce its borrowings to $9.5 billion.

Earlier this month, Chesapeake Energy CEO Aubrey McClendon stated, “We are pleased with the progress we’ve made toward achieving our long-term debt goals since the beginning of 2011, and we look forward to the completion of those goals, driven by the success of our asset sale program, which remains on track.”

McClendon also said, the company is proud of its oil and natural gas liquids production growth, and the company is looking forward to completing its assets sales between 2012 and 2013. Furthermore, he said the company looks forward to a “more focused drilling activity that will lead, over time, to a balance between drilling capital expenditures and operating cash flow.”

Chesapeake Energy Corporation (NYSE:CHK) expects to close its new term loan facility on November 9, 2012.