In an effort to reduce its mounting debt, Oklahoma City-based Chesapeake Energy Corporation has obtained a 5-year, $1 billion secured loan and will use the proceeds to refinance debt with higher interest rates, according to a NewsOK report.
“Chesapeake expects this financing and the tender offers to improve its financial flexibility as it will allow for the retirement of existing debt with upcoming maturities,” the company said in a statement.
Chesapeake indicated that it will buy back $500 million of senior notes due between 2017 and 2023, with another $500 million in convertible senior notes due 2037 and 2038. In total, the notes have an aggregate principle of nearly $6.2 billion, according to the NEWSOK report.
The nation’s second largest natural gas producer was assisted by Goldman Sachs, Citigroup and Mitsubishi UFJ Financial Group to help arrange for the loan.
Chesapeake has been busy shedding costly assets, cutting production and slashing jobs in order to sustain the economic downturn in the energy industry.
In an earnings call earlier this month, Domenic Dell’Osso, Chesapeake’s Chief Financial Officer indicated that the company’s focus was reduction of its total debt and that its “opportunities to enter the market are improving.”
