Chesapeake Energy Corporation said Sunday it had filed for bankruptcy amid a drop in oil and gas demand and prices due to the coronavirus pandemic.
Chesapeake Energy said in a release it filed for Chapter 11 bankruptcy and will continue to operate throughout its restructuring process.
The Oklahoma City-based company said it secured a $925 million debtor-in-possession financing from certain lenders under Chesapeake’s revolving credit facility, which will be available upon court approval.
The company and certain lenders under its revolving credit facility also agreed to the principal terms of a $2.5 billion exit financing, consisting of a new $1.75 billion revolving credit facility and a new $750 million term loan, according to the release.
The company said it also has the support of its term loan lenders and secured note holders to backstop a $600 million rights offering upon exit.
“We deeply appreciate the hard work and commitment of our employees, who remain focused on safely and efficiently executing our business. We look forward to working productively with our suppliers, business partners and all stakeholders throughout this process,” Chesapeake’s President and CEO Doug Lawler said in a statement.
“Over the last several years, our dedicated employees have transformed Chesapeake’s business — improving capital efficiency and operational performance, eliminating costs, reducing debt and diversifying our portfolio,” he added. “Despite having removed over $20 billion of leverage and financial commitments, we believe this restructuring is necessary for the long-term success and value creation of the business.”
The company’s announcement wasn’t wholly unexpected. Reuters reported earlier this month that the company was preparing to file for bankruptcy, citing unnamed sources.
