A lot of debt is coming due, so CHK is going to raise some more debt in order to refinance the old stuff. It’s a parlour trick that Wall Street plays, kicking the can down the road, hoping for good things to materialize.
Since the CHK bonds have been beaten to shit, they will use some of the proceeds to buy back $500m of convertible senior notes.
This coming after the companies decision to sell its stake in the Barnett Shale has highlighted the companies efforts to pare down its gigantic debt load.
The natural gas producer hired Goldman Sachs Group Inc., Citigroup Inc. and Mitsubishi UFJ Financial Group Inc. to arrange the five-year secured debt, it said Monday in a statement. Proceeds will refinance debt, including backing tender offers to buy back up to $500 million of its bonds, according to a separate statement.
The new loan will be secured by the same collateral backing the company’s $4 billion revolving credit facility due December 2019, according to the statement. The holders of the original revolving credit loan will be senior to those holding the new loan, the company said. The existing loan pays interest at 2.5 percentage points more than the London interbank offered rate.
Wall Street seems to like it.
Seems like good management. Issue new bonds at par,
and buy back old shit at 80 cents on the dollar.
LIBOR + 2.5% for a piece of shit that’s going bust? Mispriced capital always gets flushed out the system in the end.
https://www.youtube.com/watch?v=am9BqZ6eA5c