Chesapeake Energy’s $10 Billion Gamble – Bets the Whole Company

Chesapeake EnergyIn April MDN told you about Chesapeake Energy’s deal with bankers to reaffirm their $4 billion line of credit (see Lifeline: Chesapeake’s $4B Line of Credit Reaffirmed by Banks). Everyone was happy and Chessy’s stock price spiked up. What we didn’t understand, at that time, is that Chesapeake essentially mortgaged (used as collateral) the entire company to guarantee that the company will pay back that $4 billion in debt. In essence, Chesapeake created a $10 billion mortgage, pledging almost all of the company’s assets. The mortgage includes Chesapeake’s Marcellus and Utica Shale acreage. What does that mean for northeast landowners signed with Chesapeake? What if Chesapeake defaults?…

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