Chesapeake Energy Corp. (NYSE: CHK) closed a private placement of $1.25 billion of debt on Oct. 5, shoring up capital for debt repayment 10 months after it said it had no plans to file for bankruptcy.
Chesapeake, struggling with a huge pile of debt taken for shale development, said it could convert the 10-year notes to equity in three years if its stock trades above 130% of the conversion price for a specified period.
The company also said it exchanged its common shares for preferred shares representing about $1.2 billion of liquidation value, at a discount of over 40%.
"Through the transactions that closed today, we have substantially improved our capital structure," Chesapeake CEO Doug Lawler said.
"These transactions represent major steps toward reaching our financial goals of $2 billion to $3 billion of debt reduction and growing production within free cash flow," Lawler added.
The company's total debt stood at about $8.7 billion as of June 30.
The Oklahoma City-based company said its cash on hand as of Sept. 30 was about $1 billion, pro forma for the convertible debt issuance.
Shares of the company were up 2 cents at $6.82 in extended trading.
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