Chesapeake Energy goes under as yesterday it filed for Chapter 11 bankruptcy. As it couldn’t shake off the impact of the pandemic, and the negative price of Oil, which led to a Q1 loss of more than $8 billion, now it became the largest US oil and gas producer to look for bankruptcy protection.
Over time, the debt has been scrapped off. In 2013, the company had $13 billion worth of debt, which has been minimized by the current CEO through spending cuts, and asset sales. In just one trimester, it lost $700 million of its value.Doug Lawler, the CEO, stated yesterday that, "Despite having removed over $20 billion of leverage and financial commitments, we believe this restructuring is necessary for the long-term success and value creation of the business."
It made this move, as it couldn't handle the $9 billion in debts. As part of the process, the lenders are to cut $7 billion of the debt, while the company will work as usual until the bankruptcy finalizes. It agreed on a $2.5 billion exit financing, while lenders and secured noteholders decided on a $600 million backstopping offering of new shares.
In more than two decades since it started functioning, it became the sixth natural gas producer by volume.
At closing on Friday, the company was valued at approximately $115 million, while over the year, the stock price fell by 93%.
Read more about the pandemic’s effects on the markets here!
Sources: theguardian.com, reuters.com