Matt Daily & Kevin Lim
Chesapeake Energy Corp said on Monday it planned to raise $5 billion by selling stakes in assets and issuing debt and stock in a bid to pay down borrowings and increase its production levels.
It said it would sell 20 percent of its Appalachia unit, which holds its Marcellus Shale operations, as well as try to sell stakes in its processing operations in an effort to pay down part of its senior debt, which totalled $10.4 billion at the end of 2009.
Chesapeake said in a separate statement it has placed $600 million of non-voting convertible preferred stock with a unit of Singapore state investor Temasek Holdings and Chinese private equity firm Hopu.
Temasek and Hopu have also been given the option to place another $500 million worth of Chesapeake preferred stock, which carry a coupon of 5.75 percent, with other investors in Asia.
Chesapeake has grown into one of the largest U.S. natural gas producers in recent years, but its aggressive expansion has forced it to seek partners to raise cash to fund its production.
Weakness in natural gas prices has prompted the company, like its peers, to seek to increase its output of crude oil and natural gas liquids.
The company said it would repay some outstanding senior notes with the $600 million private placement of convertible preferred stock that was also announced on Monday.