Corporate News: Chesapeake to Sell Notes to Retire Debt
Chesapeake Energy Corp. is seeking to sell $2.3 billion of senior notes and use the proceeds to retire more expensive debt.</br></br>The natural-gas company said Monday it plans to issue the new notes to help redeem about $2.2 billion in outstanding debt, some of which was issued at relatively high interest rates when the Oklahoma City company had liquidity problems.</br></br>The refinancing effort comes amid a push to trim spending and pare debt at Chesapeake, the nation's second-biggest natural-gas producer, after Exxon Mobil Corp. Chesapeake, which has a stock-market value of about $14.5 billion, was carrying $12.3 billion in debt at the end of last year. The company's debt increased to $16 billion last year as Chesapeake borrowed to stave off a liquidity crisis brought on by sinking natural-gas prices and the company's heavy spending.</br></br>Chesapeake plans to spend about $4 billion more than its projected cash flow this year, a gap the company aims to plug with funds from asset sales, which might also help trim debt.</br></br>But demand for natural-gas properties is soft, so a "material reduction in debt" may be hard to achieve, investment bank Tudor, Pickering, Holt & Co. said in a research note Monday.