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Chesapeake Energy Corporation Delivers Notice To Depositary To Redeem 6.775% Senior Notes Due 2019 At Par

Chesapeake Energy Corporation (NYSE:CHK) delivered notice today to the Depositary to redeem the company’s 6.775% Senior Notes due 2019 (the “Notes”) at par. In addition, Chesapeake is continuing to pursue its lawsuit requesting the United States District Court for the Southern District of New York confirm that the notice to redeem the Notes the company issued today will be timely and effective to redeem the Notes at par, with payment to be made within 60 days after such notice, pursuant to the Special Early redemption provision of the Notes.

On Thursday afternoon the Court denied Chesapeake’s request for a preliminary injunction concerning The Bank of New York Mellon Trust Company’s obligation to accept the company’s notice of Special Early redemption at par. Although Chesapeake did not receive the preliminary order that it had requested from the Court, it did receive what the company views as comparable relief. In particular, the Court stated multiple times that it is “overwhelmingly” likely that the company's notice to redeem at par will not be determined by the Court to be a notice to redeem under the “make-whole” provision of the indenture, even if the notice to redeem at par is ultimately deemed untimely. The Court also stated that “it is overwhelmingly likely that an untimely notice of Special Early redemption would be held null and void, and not as requiring redemption under the entirely different Make-Whole Price. Lest the point be unclear, I will add this: it would be reckless for any party or entity to condition its conduct or order its legal or business affairs on the assumption that the Court would rule otherwise.” Although these statements were preliminary, Chesapeake believes, based on these statements, that a notice to redeem at par, if it is ultimately found to be untimely, would be null and void, and the Notes would remain outstanding. Accordingly, the company has proceeded with the issuance of the notice of a Special Early redemption at par.

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