Chesapeake Borrows $3 Billion Unsecured from Goldman Sachs and Jefferies Group

Just announced after hours:

"Chesapeake Energy announced it has entered into a $3.0 billion unsecured loan from Goldman Sachs Bank USA and affiliates of Jefferies Group, Inc. The new facility, which ranks pari passu to Chesapeake’s outstanding senior notes, matures on December 2, 2017 and may be repaid at any time this year without penalty at par value and carries an initial variable annual interest rate through December 31, 2012 of LIBOR plus 7.0%, which is currently 8.5%, given the 1.5% LIBOR floor in the loan agreement. During the remainder of the year, Chesapeake plans to complete asset sales totaling $9.0-$11.5 billion and intends to use a portion of the proceeds from these asset sales to repay the loan. Chesapeake has received strong interest from prospective buyers of its Permian Basin asset sales process and its Mississippi Lime joint venture process, and the company expects to complete these two transactions in the 2012 third quarter."

So... this seems to refute all the fear-mongering today that caused the stock to tank. Despite what some bush league journalists think, there was nothing in the 10-Q to the effect that the asset sale plans had been cancelled. Nor does it seem that the company is having any trouble borrowing money cheaply when needed.

Note that this loan is unsecured and has no prepayment penalty. That's pretty favorable terms. I assume the purpose of raising the cash was just to get the critics to shut up.

The stock is currently up after hours on Friday. I would be surprised if today didn't mark the final bottom, for reasons that I will detail in a later post.