Chesapeake Energy Restructuring Support Agreement

The company said it had entered into a restructuring support agreement “to eliminate $7 billion in debt” with the majority of its creditors and had “secured $925 million in self-financing (PID) from lenders.” By way of explanation, it stated that the deposit would enable it to finance its operations and thus continue to operate normally during the bankruptcy and restructuring process. Chesapeake Energy, a U.S. company with one of the largest portfolios of unconventional oil and natural gas assets in the country, has applied for Chapter 11 insolvency protection to allow for a full restructuring of balance sheets. More information on Chesapeake`s submission under Chapter 11 will be available under www.chk.com/restructuring-information. Court records and information on the appeal procedure are available under dm.epiq11.com/chesapeake. Under the RSA, the Company secured $925 million (“PII”) self-financing from certain lenders under the Chesapeake Revolving Credit Facility, which will be available upon court approval. The financing package will provide Chesapeake with the capital necessary to finance its operations during the Chapter 11 reorganization proceedings, overseen by the court. The company and certain lenders under the Chesapeake Revolving Credit Facility also agreed on key terms of a $2.5 billion exit financing consisting of a new $1.75 billion revolving credit facility and a new $750 million loan. In addition, the company has the support of its lenders and covered bond holders to secure a $600 million preferential rights offer on exit. “Chesapeake refinanced the debt in December 2019 at an interest rate above 10%. The futures facility contained some aggressive covenant provisions, including a quarterly decline in the net debt EBITDA ratio. The company was forced to make some difficult decisions, including whether it had to continue drilling unprofitable wells to support EBITDA for the sole purpose of preventing debts from being breached. == The pipeline regulator, the Federal Energy Regulatory Commission, prevented Chesapeake from changing its agreement with Energy Transfer last week and similar requests from Gulf South and stagecoach Pipeline & Storage, owned by Crestwood Equity Partners and Consolidated Edison. .

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