Chesapeake Energy Corporation (NYSE:CHK) is having a good day. The firm's shares are up a fraction under 1 percent on today's trading after a New York judge ruled that the company had the right to pay back some of its debt early, a move that will save the company about $100 million.
The case isn't the first that the company has won in recent weeks, and with the weight of legal action facing the company, today's win is a very good progression indeed. According to a Bloomberg report on the ruling, Chesapeake was pleased with the ruling while a The Bank of New York Mellon Corporation (NYSE:BK) will “continue to represent the interests of the bondholders in our role as trustee.”
Chesapeake Energy Corporation sued The Bank of New York Mellon Corporation (NYSE:BK) in March in response to a challenge from the bank to a Chesapeake plan that would see it pay back its debts earlier than had been planned. Today's order will see Chesapeake Energy Corporation (NYSE:CHK) call $1.3 billion in bonds six years early.
A Chesapeake Energy Corporation (NYSE:CHK) spokesperson said that the deal is expected to save the company around $100 million. The notes, which carried an interest rate of 6.775 percent, were originally due to be paid in November of 2019. The price of the notes dropped 7.2 cents to 100.8 cents on the dollar on today's market.
The notes were issued in February of last year in order to provide short term financing for a company that was desperately short of cash. Asset sales have rebalanced the firm's position, allowing it to pay off these debts early, and the courts seem to agree.
So far in 2013, shares in the natural gas producer have gained 16 percent as the firm's fortunes appear to be turning around on new management and debt restructuring. The company's stock gained almost all of it's year to date bump in January, after it announced that CEO and founder Aubrey McClendon would be leaving the company.
Since January, however, the firm's stock has actually seen a price decline. Despite debt restructuring and asset sales at the firm, investors are still nervous about the future of the company, and the future of the natural gas industry. Chesapeake Energy Corporation (NYSE:CHK) is the second biggest producer of natural gas in the United States, but demand has not been able to keep up with the massive new supplies from practices like fracking.