Addled company Chesapeake Energy Corp saw a glint of sunlight now that they’ve won the right to redeem $1.3 billion in notes early, though the note’s trustee, Bank of New York Mellon Corp, had tried to bar them, claiming they missed their deadline to do so. The notes would have matured in 2019, but Chesapeake did manage to make the March 15 deadline, and so U.S. District Judge Paul Engelmayer ruled in their favor.
“Chesapeake’s notice was effective, not defective,” he wrote in a 92-page decision, as reported by Reuters, and the bank’s interpretation to bar it was “tortured and incoherent,” and he concluded that the evidence “convincingly establishes a meeting of the minds among the negotiating parties as to the deadline. These parties intended and agreed that March 15, 2013, would serve as the deadline for Chesapeake to give notice.”
Well that’s good, as it will save the company more than $100 million in interest payments. And it seems lately that Chesapeake can use a little help nowadays. Domenic Dell’Osso, Chesapeake’s chief financial officer, naturally said he was pleased with the decision. But the notes nevertheless fell 7 cents to 100.5 cents.
Chesapeake has cut their spending and decided to focus on drilling their best properties. They made $3.5 billion less than they needed to this year, and finished the first quarter with $13.4 billion in debt.
Perhaps the business about the notes can give them that extra push in the right direction; perhaps the rearrangement of their board by investors will help?
The case is Chesapeake Energy Corp v. Bank of New York Mellon Trust Co, U.S. District Court, Southern District of New York, No. 13-01582.