Chesapeake Energy 2000 Annual Report Download - page 103
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Please find page 103 of the 2000 Chesapeake Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.semi-annually. Upon an amendment to the Credit Facility dated November 15, 2000, the borrowing base was
reduced to $10.75 million and the principal is due at maturity, January 31, 2001. Interest is payable monthly
calculated at the Bank One base rate, as determined from time to time by Bank One. Gothic may elect to calculate
interest under a London Interbank Offered Rate ("LIBOR") plus 1.5% (or up to 2.0% in the event the loan balance
is greater than 75% of the borrowing base). Gothic is required to pay a commitment fee on the unused portion of the
borrowing base equal to ½ of 1% per annum. Under the Credit Facility, Bank One holds first priority liens on
substantially all of the natural gas and oil properties of Gothic, whether currently owned or hereafter acquired. As of
December 31, 2000 there were no borrowings outstanding under the Credit Facility. The Credit Facility was
terminated on January 31, 2001.
1] 1/8% Senior Secured Notes Due 2005
The 111/8% Senior Secured Notes Due 2005 ("Senior Secured Notes") issued by Gothic Production are fully
and unconditionally guaranteed by Gothic Energy. The aggregate original principal amount of Senior Secured Notes
outstanding was $235.0 million issued under an indenture dated April 21, 1998 (the "Senior Note Indenture"). The
Senior Secured Notes bear interest at 111/8% per annum payable semi-annually in cash in arrears on May 1 and
November 1 of each year commencing November 1, 1998. The Senior Secured Notes mature on May 1, 2005. All
of the obligations of Gothic Production under the Senior Secured Notes are collateralized by a second priority lien
on substantially all of Gothic's natural gas and oil properties, subject to certain permitted liens.
Gothic may, at its option, at any time on or after May 1, 2002, redeem all or any portion of the Senior Secured
Notes at redemption prices decreasing from 105.563%, if redeemed in the 12-month period beginning May 1, 2002,
to 100.00% if redeemed in the 12-month period beginning May 1, 2004 and thereafter plus, in each case, accrued
and unpaid interest thereon. Notwithstanding the foregoing, at any time prior to May 1, 2002, Gothic may, at its
option, redeem all or any portion of the Senior Secured Notes at the Make-Whole Price (as defined in the Senior
Note Indenture) plus accrued or unpaid interest to the date of redemption. In addition, in the event Gothic
consummates one or more Equity Offerings (as defined in the Senior Note Indenture) on or prior to May 1, 2001,
Gothic, at its option, may redeem up to 33½% of the aggregate principal amount of the Senior Secured Notes with
all or a portion of the aggregate net proceeds received by Gothic from such Equity Offering or Equity Offerings at a
redemption price of 111.125% of the aggregate principal amount of the Senior Secured Notes so redeemed, plus
accrued and unpaid interest thereon to the redemption date; provided, however, that following such redemption, at
least 66% of the original aggregate principal amount of the Senior Secured Notes remains outstanding.
Following the occurrence of any Change of Control (as defined in the Senior Note Indenture), Gothic must
offer to repurchase all outstanding Senior Secured Notes at a purchase price equal to 101% of the aggregate
principal amount of the Senior Secured Notes, plus accrued and unpaid interest to the date of repurchase. Gothic
made a Change of Control offer following the Chesapeake Merger. The offer terminated on February 22, 2001. Prior
to the expiration of the offer, $1.0 million of the Senior Secured Notes were tendered and purchased by Gothic.
The Senior Note Indenture under which the Senior Secured Notes were issued contains certain covenants
limiting Gothic with respect to or imposing restrictions on the incurrence of additional indebtedness, the payment of
dividends, distributions and other restricted payments, including the payment of dividends and distributions to
Gothic Energy and Chesapeake, the sale of assets, creating, assuming or permitting to exist any liens (with certain
exceptions) on its assets, mergers and consolidations (subject to meeting certain conditions), sale leaseback
transactions, and transactions with affiliates, among other covenants.
Events of default under the Senior Note Indenture include the failure to pay any payment of principal or
premium when due, failure to pay for 30 days any payment of interest when due, failure to make any optional
redemption payment when due, failure to perform any covenants relating to mergers or consolidations, failure to
perform any other covenant or agreement not remedied within 30 days of notice from the Trustee under the Senior
Note Indenture or the holders of 25% in principal amount of the Senior Secured Notes then outstanding, defaults
under other indebtedness of Gothic causing the acceleration of the due date of such indebtedness having an
outstanding principal amount of $10.0 million or more, the failure of Gothic Production to be a wholly owned
subsidiary of Gothic Energy, and certain other bankruptcy and other court proceedings, among other matters.
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