Chesapeake Energy Corporation (NYSE:CHK) announced that it successfully priced its proposed term loan and, as a result of strong demand, has upsized the term loan to $1.5 billion from a previously announced size of $1.0 billion. The term loan is being arranged by Goldman Sachs Bank USA, Citigroup Global Markets Inc. and MUFG as joint lead arrangers. Chesapeake intends to use the net proceeds of the loan to finance tender offers for its unsecured notes, with any remaining proceeds used for further debt repayments and other general corporate purposes. Chesapeake expects this financing and the tender offers to improve its financial flexibility by reducing its near-term maturing debt.
The loan will have a five-year term and bear interest at a rate of LIBOR plus 7.50% per annum, subject to a 1.00% LIBOR floor. The loan will be made at par without original issue discount. The loan will be secured by the same collateral securing the company’s revolving credit facility (with a position in the collateral proceeds waterfall junior to the credit facility).
The new term loan will be unconditionally guaranteed on a joint and several basis by Chesapeake Energy Corporation (NYSE:CHK) direct and indirect wholly owned domestic subsidiaries that are guarantors under the company’s revolving credit facility.
The loan is expected to close on or before August 23, 2016, subject to customary closing conditions and final documentation. (Original Source)
Shares of Chesapeake Energy Corporation (NYSE:CHK) yesterday at $5.91, up $0.41 or 7.45%. CHK has a 1-year high of $9.55 and a 1-year low of $1.50. The stock’s 50-day moving average is $4.82 and its 200-day moving average is $4.40.
On the ratings front, CHK has been the subject of a number of recent research reports. In a report released yesterday, Barclays analyst Thomas Driscoll reiterated a Sell rating on CHK, with a price target of $3, which implies a downside of 49.2% from current levels. Separately, on the same day, Capital One Financial ‘s Phillips Johnston upgraded the stock to Hold .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Thomas Driscoll and Phillips Johnston have a total average return of 1.0% and -10.6% respectively. Driscoll has a success rate of 53.4% and is ranked #1682 out of 4124 analysts, while Johnston has a success rate of 25.0% and is ranked #3306.
The street is mostly Neutral on CHK stock. Out of 12 analysts who cover the stock, 6 suggest a Hold rating , 4 suggest a Sell and 2 recommend to Buy the stock. The 12-month average price target assigned to the stock is $5.00, which represents a potential downside of 15.4% from where the stock is currently trading.
Chesapeake Energy Corp. is a natural gas and oil exploration and production company, which is engaged in the exploration, development and acquisition of properties for the production of natural gas, oil and natural gas liquids from underground reservoirs. It also provides substantial marketing, drilling and other oilfield services.