Chesapeake Energy, Oklahoma City, has filed for Chapter 11 bankruptcy protection to facilitate a comprehensive balance sheet restructuring, the Oklahoma-based company said June 28.
Chief executive officer Doug Lawler said that the company aims to eliminate $7 billion of debt and address legacy contractual obligations while it continues to operate in the ordinary course during the process.
The company entered into a restructuring support agreement with 100% of the lenders under its revolving credit facility, holders of 87% of the obligations under its term loan agreement, 60% of its senior secured second lien notes due 2025, and 27% of its senior unsecured notes.
As part of the agreement, the company has secured $925 million in debtor-in-possession financing from certain lenders under Chesapeake's revolving credit facility, which will be available upon court approval.
The company and certain lenders under the revolving credit facility have also agreed to the principal terms of a $2.5 billion exit financing, consisting of a new $1.75 billion revolving credit facility and a new $750 million term loan. Additionally, Chesapeake has the support of its term loan lenders and secured note holders to backstop a $600 million rights offering upon exit.
Chesapeake has filed customary motions with the court seeking a variety of "first-day" relief, including authority to pay owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided.