Chesapeake amends revolving credit facility

Chesapeake Energy Corp. (NYSE: CHK) has amended its five-year, $4 billion revolving credit facility agreement maturing in 2019 with its bank syndicate group.

Key attributes include:

  • Facility moves to a $4 billion senior secured revolving credit facility from a senior unsecured revolving credit facility
  • The initial borrowing base is confirmed at $4 billion, consistent with current availability
  • Previous total leverage ratio financial covenant of 4.0x trailing 12-month earnings before interest, depreciation and amortization (EBITDA) is suspended
  • Two new financial covenants include a senior secured leverage ratio of 3.5x through 2017 and 3.0x thereafter, and an interest coverage ratio of 1.1x through the first quarter of 2017, increasing incrementally to 1.25x by the end of 2017.

Chesapeake’s credit facility may become unsecured when specific conditions set forth in the credit agreement are met. During an unsecured period, the total leverage ratio would be reinstated and the senior secured leverage ratio and interest coverage ratio would no longer apply. While Chesapeake’s obligations under the facility are secured, the amendment gives Chesapeake the ability to incur up to $2 billion of junior lien indebtedness. As of Sept. 30, Chesapeake has $12 million in outstanding letters of credit under the facility with the remainder of the $4 billion available.

 

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