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MUFG Union Bank Agents Syndicated $3.8B Credit Facility for Chesapeake Energy

September 13, 2018, 07:17 AM
Filed Under: Energy

Chesapeake Energy Corporation announced it has amended and restated its senior secured revolving credit facility agreement. The amended and restated facility received initial commitments from 15 institutions totaling $3.8 billion, which exceeded the $3.0 billion borrowing base the company was seeking. The initial borrowing base does not include any properties being sold in the company's $2.0 billion Utica Shale transaction expected to close in the fourth quarter of 2018, thus the borrowing base will not be affected when the transaction closes. The credit facility will mature in September 2023. 

Nick Dell'Osso, Chesapeake's Executive Vice President and Chief Financial Officer, commented, "We are very pleased with the five-year renewal of our credit facility which demonstrates the confidence of our bank group in Chesapeake's future. We were able to reduce our borrowing base to $3.0 billion based on our significantly improved cash flow profile, operating and capital efficiency and the strength of our portfolio after our planned Utica Shale divestiture. The decreased size of the facility will result in reduced costs while maintaining an ample liquidity backstop with significant cushion to execute an optimal business plan through commodity cycles. Along with our greatly simplified balance sheet, pending significant reduction in outstanding debt and improving operating and financial results, the renewal of our credit facility places Chesapeake in a position of significant strength."

The credit facility is led by MUFG Union Bank, N.A., as administrative agent, co-syndication agent, swingline lender and a letter of credit issuer, and Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as co-syndication agents, swingline lenders, and letter of credit issuers. MUFG Union Bank, N.A., Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BMO Capital Markets Corp., Citicorp North America, Inc., Crédit Agricole Corporate and Investment Bank, Mizuho Bank, Ltd., and Royal Bank of Canada served as joint lead arrangers and joint bookrunners for the transaction. Chesapeake intends to use this credit facility for working capital and general corporate purposes.

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