Chesapeake says swapped debt for 4 pct of equity over past week
Debt-laden Chesapeake Energy Corp , the second-largest U.S. natural gas producer, said on Thursday it had issued or agreed to issue about 4 percent of its outstanding shares in exchange for debt over the past week.
The company's shares were up 4 percent at $4.54 in premarket trading following news of the privately negotiated deals.
A number of U.S. oil producers have completed debt-for-equity swaps or bond swaps as they try to reduce their debt and interest payments as oil prices remain weak.
Chesapeake, whose debt stands at about $9 billion, said it issued or agreed to issue about 28.1 million shares between May 5 and May 11 in exchange for senior notes worth about $153 million. The notes are due in 2017, 2019, 2037 and 2038.
The company said in February it had tapped legal firm Kirkland & Ellis for advice as it seeks to bolster its balance sheet to manage debt maturing in the next 18 to 24 months.
Chesapeake has said it has no plans to seek bankruptcy protection, as some analysts and investors have speculated.
Chief Financial Officer Nick Dell'Osso said on May 5 that Chesapeake was considering "the use of additional secured debt, private transactions with bondholders and other types of exchange offers and open market purchases."
Up to Wednesday's close, Chesapeake's shares had fallen about 24 percent since then.
The company surprised investors last month by keeping its $4 billion loan from banks even as many other oil and gas producers reported steep falls in credit limits.
But the renewed credit limit came at a steep price. Chesapeake disclosed on April 11 that it had to pledge 90 percent of its proved oil and gas properties, all hedge contracts and personal property.
Chesapeake has also been looking to sell assets to shore up its finances. The company said last week it would sell $470 million of oil and gas assets in Oklahoma to Newfield Exploration Co, and is looking to sell assets worth another $500 million to $1 billion this year. (Reporting by Swetha Gopinath in Bengaluru; Editing by Ted Kerr)