Chesapeake Energy Corp. is seeking a $1 billion loan as the company, battered by cratering fuel prices and credit downgrades, takes a step to address its $9 billion debt load, Bloomberg News reported yesterday. 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 yesterday. Proceeds will refinance debt, including backing tender offers to buy back up to $500 million of its bonds, according to a separate statement. The tender offer has resulted in S&P Global Ratings lowering its grade for Chesapeake to 10 levels below investment-grade or CC, the company said in a statement. S&P views the move as a “distressed transaction" and a “selective default” for some longer-dated notes that may be exchanged at levels “significantly less than par value as part of the tender.” Chesapeake has been cutting production, reducing jobs and exchanging stock for debt as it seeks to weather plunging fuel prices and a shareholder revolt that culminated with the termination of the company founder’s job. Read more.
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