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OKLAHOMA CITY, May 20, 2008 (BUSINESS WIRE) -- Chesapeake Energy Corporation (NYSE:CHK) today announced that it
has priced an offering of $1.2 billion of contingent convertible
senior notes due 2038. The offering was increased from a previously
announced offering size of $500 million. The notes will be
convertible, under certain circumstances, using a net share settlement
process, into a combination of cash and Chesapeake common stock at an
initial conversion price of $85.89 (subject to adjustment in certain
circumstances), which is equivalent to an initial conversion rate of
approximately 11.6428 common shares per $1,000 principal amount of
convertible notes. In general, upon conversion of a note, the holder
of such note will receive cash equal to the principal amount of the
note and Chesapeake common stock for the note's conversion value in
excess of such principal amount. The company has granted the
underwriters of the offering an option to purchase up to an additional
$180 million aggregate principal amount of notes to cover
The convertible notes will bear interest at a rate of 2.25% per
annum. The convertible notes will also bear contingent interest in
certain circumstances for semi-annual interest periods beginning
December 15, 2018. The convertible notes will mature on December 15,
2038 and may not be redeemed by Chesapeake prior to December 15, 2018.
Holders of the convertible notes may require Chesapeake to repurchase
some or all of the convertible notes on December 15, 2018, 2023, 2028
and 2033, or in the event of certain change of control transactions,
at 100% of the principal amount of the notes.
The contingent convertible senior notes were offered pursuant to a
registration statement filed on May 19, 2008 with the U.S. Securities
and Exchange Commission. Chesapeake intends to list the notes on the
New York Stock Exchange after issuance.
Chesapeake expects the issuance and delivery of the convertible
notes to occur on May 27, 2008, subject to customary closing
conditions. Chesapeake intends to use the net proceeds from the
offering, together with proceeds from the concurrent public offering
of senior notes, to fund the redemption of its 7.75% Senior Notes due
2015, to repay outstanding indebtedness under its revolving credit
facility and for general corporate purposes.
Banc of America Securities LLC, Barclays Capital, Credit Suisse,
Goldman, Sachs & Co., and UBS Investment Bank are acting as joint
book-running managers for the convertible notes offering. Copies of
the prospectus supplement relating to the offering may be obtained
from Banc of America Securities LLC, Capital Markets (Prospectus
Fulfillment) by email at firstname.lastname@example.org
or by mail at Banc of America Securities LLC, Capital Markets
Operations, 100 West 33rd Street, 3rd Floor, New York, New York 10001.
An electronic copy of the prospectus supplement is available on the
website of the Securities and Exchange Commission at www.sec.gov.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any jurisdiction.
Chesapeake Energy Corporation is the third-largest producer of
natural gas in the U.S. Headquartered in Oklahoma City, the company's
operations are focused on exploratory and developmental drilling and
corporate and property acquisitions in the Fort Worth Barnett Shale,
Fayetteville Shale, Haynesville Shale, Mid-Continent, Appalachian
Basin, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast
and Ark-La-Tex regions of the United States.
SOURCE: Chesapeake Energy Corporation
Chesapeake Energy Corporation
Jeffrey L. Mobley, CFA, 405-767-4763
Senior Vice President - Investor Relations and Research
Marc Rowland, 405-879-9232
Executive Vice President and Chief Financial Officer