Chesapeake moves to quash bankruptcy fears as shares plunge
Source: Reuters
Mon Feb 8, 2016 4:01pm EST
Chesapeake moves to quash bankruptcy fears as shares plunge
BY JESSICA DINAPOLI AND MIKE STONE
Chesapeake Energy, the No. 2 U.S. natural gas producer, said on Monday it had no plans to file for bankruptcy, after sources told Reuters the company had asked its longtime counsel to look at restructuring options.
Chesapeake's shares were halted after plunging more than 50 percent but later pared some losses, as it said advisers Kirkland & Ellis had been providing counsel since 2010 and will continue to help the company strengthen its balance sheet.
Trade publication Debtwire had reported the engagement of Kirkland & Ellis on Friday evening, prompting Chesapeake's shares to drop early on Monday to $1.50 on fears it might soon make one of the biggest bankruptcy filings of the current crash in oil and natural gas prices.
The company, seeking to downplay those worries, said it "currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders."
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Read more: http://www.reuters.com/article/us-chesapeake-restructuring-idUSKCN0VH1F2
Source: Bloomberg
Chesapeake Energy Plunges on Cash Concerns
by Joe Carroll
February 8, 2016 — 11:24 AM EST Updated on February 8, 2016 — 4:30 PM EST
Chesapeake Energy Corp. plunged 33 percent amid concern the U.S. natural gas driller’s financial options are narrowing. The company dismissed speculation it’s facing a liquidity crisis.
Burdened with a debt load eight times larger than its market value, Chesapeake has been canceling drilling projects, trimming its workforce and closing offices to slow the rate at which it burns through cash. Monday’s panic was triggered by a sell-off in 3.25 percent notes that mature next month, spurring concern that Chesapeake might be unable to pay off the $500 million bonds, said Tim Rezvan, an analyst at Sterne Agee & Leach Inc.
“When those notes traded off, people started wondering that maybe they’re not going to be able to make their payment five weeks from now,” said Rezvan, who said the concerns were unwarranted. “The company still has an undrawn $4 billion credit facility available to it, and we think they ended 2015 with some cash on hand.”
Chesapeake issued a statement Monday dismissing a Debtwire report that it had brought on restructuring attorneys from Kirkland & Ellis LLP to help sort out its balance sheet. The law firm has served as one of the company’s counsel since 2010 and continues to advise on its recent debt exchange, Chesapeake said in the statement. After the statement’s release, the stock pared losses that had reached a record 51 percent earlier Monday.
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Read more: http://www.bloomberg.com/news/articles/2016-02-08/chesapeake-says-it-has-no-plans-of-pursuing-bankruptcy
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