Chesapeake Energy Corporation (NYSE:CHK) announced Monday that it is offering $2.3 billion of senior notes to fund a bond buyback program. The Oklahoma City-based oil and natural gas giant which pioneered the Shale boom, said the senior notes will be issued in three different series. The first one will mature in 2016, the next one in 2021 and the last one will mature in 2023.
Announcing the bond buyback on Monday, the company launched a tender offer for the entire $464.1 million principal outstanding of its 7.625 percent senior notes due 2013, and $473.7 million worth of principal in 6.875 percent senior notes due 2018. A substantial portion of the remaining proceeds will be used to purchase the 6.775 percent senior notes at par value, if it receives a favorable ruling in a declaratory judgement pending in the District Court in New York.
The company desperately wants to purchase $1.3 billion of the 2019 senior notes at par value. But a few investors have demanded a 30 percent premium, which amounts to approximately $400 million. The District Judge on Thursday refused the possibility of Chesapeake Energy Corporation (NYSE:CHK) redeeming the bonds at face value. But he clarified that Chesapeake Energy Corporation may not be forced to pay a premium. The Judge Engelmayer criticized the investors, including The Bank of New York Mellon Corporation (NYSE:BK), for asking the court to force Chesapeake Energy Corporation (NYSE:CHK) to pay a premium.
The $1,000 principal amount, along with $30 early tender premium, will be priced at $1,020 for 2013 senior notes and $1,074.50 for 2018 senior notes, according to Fox Business.
If any portion of the proceeds is not used for these purposes, that sum will be used to purchase, repay of redeem the 2013 notes not tendered in the current tender offer, or to pay off debts.
Chesapeake Energy Corporation (NYSE:CHK) shares were down 0.36 percent to $22.38 at 12:19 PM EDT. The shares have gained over 35 percent this year so far.
