Chesapeake Energy 1996 Annual Report Download - page 57

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CHESAPEAKE EN
The aggregate scheduled maturities of notes payable
and long-term debt for the next five fiscal years ending
June 30, 2001 and thereafter were as follows as of June
30, 1996 (in thousands of dollars):
In April 1993, CEX entered into an oil and gas re-
serve-based reducing revolving credit facility (the "Re-
volving Credit Facility") with Union Bank. The Revolv-
ing Credit Facility has been amended from time to time,
most recently in September 1996. Concurrent with the
September 1996 amendment, the company increased the
facility size to $125 million and expanded its bank group
with Union Bank remaining as agent.
The maturity date of the Revolving Credit Facility is
April 30, 2001. The facility provides for interest at the
Union Bank reference rate (8.25% at June 30, 1996) or,
at the option of the company the Eurodollar rate plus
1.375% to 1.875% depending on the ratio of the amount
outstanding to the borrowing base. Borrowings are col-
lateralized by a first priority lien on substantially all of
CEX's proved producing reserves, and are uncondition-
ally guaranteed by the company. At June 30, 1996 and
1995 there was $0 and $10,000 outstanding under the
Revolving Credit Facility, respectively.
The amount of credit available at any time under the
Revolving Credit Facility is the lesser of the commitment
amount or the borrowing base. The borrowing base is
reduced each month by a specified amount. Both the
borrowing base and the monthly reduction amount are
redetermined by Union Bank each May 1 and Novem-
ber 1 and may be redetermined at any other time upon
the request of CEX or Union Bank. To the extent the
amount outstanding at any time exceeds the borrowing
base, CEX must reduce the amount outstanding or add
additional collateral. At June 30, 1996, the commitment
amount and the borrowing base under the Revolving
Credit Facility were $35 million, and the monthly re-
duction amount was $700,000. The Revolving Credit
5Y CORPO RAT! ON
Facility was amended in September 1996 to provide for
a borrowing base and a commitment amount of $75
million, with a monthly reduction amount of$ 1,750,000.
The Revolving Credit Facility contains customary finan-
cial covenants, limitations on indebtedness and liabili-
ties, liens, prepayments of other indebtedness (including
the 12%, 10.5% and 9.125% Senior Notes) and loans,
investments and guarantees by the company and prohib-
its the payment of dividends on the company's Com-
mon Stock.
The company's wholly-owned subsidiary, CGDC, has
a credit facility with Union Bank (the "Term Credit Fa-
cility"), with an outstanding balance of$12.9 million at
June 30, 1996. Collateral for the Term Credit Facility is
limited to CGDC's producing oil and gas properties. The
Term Credit Facility has not been guaranteed by the com-
pany or any of its other subsidiaries and is recourse only
to the assets of CGDC. CGDC acquired producing oil
and gas properties from CEX in December 1994, June
1995 and December 1995 in exchange for $5.5 million,
$6 million and $5.3 million in cash, respectively, using
proceeds borrowed under this facility. CGDC has not
guaranteed the payment of the company's 12%, 10.5%
or 9.125% Senior Notes, nor has the capital stock of
CGDC been pledged as collateral for such indebtedness.
The terms of the Term Credit Facility prohibit the pay-
ment of dividends by CGDC.
4. CONTINGENCIES
AND COMMITMENTS
The company is currently involved in various routine
disputes incidental to its business operations. While it is
not possible to determine the ultimate disposition of these
matters, management, after consultation with legal coun-
sel, is of the opinion that the final resolution of all cur-
rently pending or threatened litigation is not likely to
have a material adverse effect on the consolidated finan-
cial position or results of operations of the company.
The company has employment contracts with its two
principal shareholders and its chief financial officer and
various other senior management personnel which pro-
vide for annual base salaries, bonus compensation and
various benefits. The contracts provide for the continua-
tion of salary and benefits for the respective terms of the
agreements in the event of termination of employment
without cause. These agreements expire June 30, 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1997 $ 6,755
1998 14,234
1999 13,637
2000 13,344
2001 14,565
After 2001 212,651
$275,186