Chesapeake Energy Corporation (NYSE:CHK), the second largest producer of natural gas in the United States announced the completion of the spin-off of its oilfield services business into a stand-alone and publicly traded company called Seventy Seven Energy Inc. (NYSE:SSE).
SSE starts regular-way trading
According to Chesapeake Energy Corporation (NYSE:CHK), Seventy Seven Energy Inc. (NYSE:SSE) started its “regular-way” under the ticker symbol “SSE” at the New York Stock Exchange (NYSE) today.
Seventy Seven Energy Inc. previously operated under the name Chesapeake Oilfield Operating L.L.C. Its chief executive officer, Jerry L. Winchester and chief financial officer, Cary D. Baetz will remain in their positions, according to Chesapeake Energy Corporation (NYSE:CHK).
Chesapeake Energy distributed shares to stockholders
Following the close of business yesterday, Chesapeake Energy Corporation (NYSE:CHK) said it distributed one share of common stock of Seventy Seven Energy Inc. for every 14 shares of Chesapeake’s outstanding common stock as of June 19, 2014.
The second largest natural gas producer in the United States said it did not distribute fractional shares of Seventy Seven Energy Inc. (NYSE:SSE) common stock. Stockholders instead received the cash value of the fractional share, which they are entitled to receive.
SSE common stock distribution is tax-free to shareholders
Chesapeake Energy Corporation (NYSE:CHK) previously stated that the distribution of SSE common stock will be generally tax-free to shareholders of its common stock excluding any cash received related to their fractional share interests based on the private letter ruling from the Internal revenue Service (IRS).
The capital structure of Seventy Seven Energy Inc. (NYSE:SSE) is composed of a new senior secured term loan, a new asset-backed lending facility, existing senior notes due 2019 and new senior notes (subject to market conditions) due 2022.
Prior to the completion of the spin-off, Chesapeake’s oilfield business unit announced the pricing of $500 million in aggregate principal amount of 6.5% senior unsecured notes due 2022 in a private placement.
The company said it would use the proceeds from the private placement for the cash-distribution to its parent company, to repay all outstanding debt under its new asset backed lending credit facility to be entered into in connection with the spin-off. It would also use some of the proceeds for general corporate purposes.