Chesapeake Energy (CHK) was one of the best performers in the energy sector in the last year, and the stock gained more than 63% -- the stock has gained a further 3.8% year-to-date; however, the rise in the stock price has been slow compared to the growth shown by the stock during the last year. One of the reasons can be the overall weakness in the market due to the fears of an impending correction. Nonetheless, the long-term direction of the company is looking good. The company has been reshuffling its assets base, as well as the long-term debt. More recently, Chesapeake has issued some new debt in order to replace the debt maturing in the near term. These debt issues and the sale of some assets have enhanced the financial position of the company and made it a better prospect going forward. We will mainly talk about the debt issue and the asset sale in this article.
The Purpose of the New Debt Issue
During the last few years, Chesapeake has been able to successfully shed some of the non-core assets and direct the funds towards the debt management and investment in high-growth segments. Moreover, the company recently announced the commencement of a record $3 billion bond offering, which is intended to repay its existing unsecured term loan maturing in the near future. In November 2011, the company entered into a five-year $500 million senior secured credit facility, which will mature in 2016. Chesapeake is raising new debt through senior notes by taking advantage of low debt costs with floating yields of between 2.54% and 3.25% more than the benchmarks, with the earliest senior notes maturing in 2019.
The company initially expected to issue the series of these senior notes in three separate series: First maturing in 2019, another in 2022
