Chesapeake energy corporation enters into the second amendment to amended and restated credit agreement

On december 3, 2019, chesapeake energy corporation entered into the second amendment to amended and restated credit agreement, dated as of september 12, 2018 by and among chesapeake, as borrower, mufg union bank, n.a., as administrative agent, and the lenders from time to time party thereto. the amendment, among other things, (i) permits the issuance of certain secured indebtedness with a lien priority or proceeds recovery behind the obligations under the credit agreement without a corresponding 25% reduction in the borrowing base under the credit agreement, if issued by the next scheduled redetermination of the borrowing base, (ii) increases the amount of indebtedness that can be secured on a pari passu first-lien basis with (and with recovery proceeds behind) the obligations under the credit agreement from $1 billion to $1.5 billion, (iii) increases the applicable margin (as defined in the credit agreement) on borrowings under the credit agreement by 100 basis points, (iv) requires liquidity of at least $250 million at all times, (v) for each fiscal quarter commencing with the fiscal quarter ending december 31, 2019, replaces the secured leverage ratio (as defined in the credit agreement) financial covenant with a requirement that the first lien secured leverage ratio (as defined in the amendment) not exceed 2.50:1 as of the end of such fiscal quarter, (vi) increases the maximum permitted leverage ratio (as defined in the credit agreement) as of the end of each fiscal quarter to 4.50:1 through the fiscal quarter ending december 31, 2021, with step-downs to 4.25:1 for the fiscal quarter ending march 31, 2022 and to 4.00:1 for each fiscal quarter ending thereafter, and (vii) requires that chesapeake use the aggregate net cash proceeds of certain asset sales in excess of $50 million to prepay certain indebtedness and/or reduce commitments under the credit agreement, until the retirement of all of chesapeake's senior notes maturing before september 12, 2023.
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