Chesapeake Energy 2013 Annual Report Download - page 97

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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levels determined by reference to the trading price of our common stock. The notes were not convertible under
this provision in 2013, 2012 or 2011. In general, upon conversion of a contingent convertible senior note, the
holder will receive cash equal to the principal amount of the note and common stock for the note’s conversion
value in excess of such principal amount. We will pay contingent interest on the convertible senior notes after
they have been outstanding at least ten years under certain conditions. We may redeem the convertible senior
notes once they have been outstanding for ten years at a redemption price of 100% of the principal amount of
the notes, payable in cash. The optional repurchase dates, the common stock price conversion threshold amounts
and the ending date of the first six-month period in which contingent interest may be payable for the contingent
convertible senior notes are as follows:
Contingent
Convertible
Senior Notes Repurchase Dates
Common Stock
Price Conversion
Thresholds
Contingent Interest
First Payable
(if applicable)
2.75% due 2035 November 15, 2015, 2020, 2025, 2030 $ 48.09 May 14, 2016
2.5% due 2037 May 15, 2017, 2022, 2027, 2032 $ 63.62 November 14, 2017
2.25% due 2038 December 15, 2018, 2023, 2028, 2033 $ 106.75 June 14, 2019
(d) Discount as of December 31, 2013 and 2012 included $303 million and $376 million, respectively, associated
with the equity component of our contingent convertible senior notes. This discount is amortized based on an
effective yield method. Discount also included $33 million and $40 million as of December 31, 2013 and 2012,
respectively, associated with our term loan discussed further below.
(e) See Note 11 for further discussion related to these instruments.
(f) As of December 31, 2012, there was $1 million of discount associated with the 7.625% Senior Notes due 2013.
Total principal amount of debt maturities, using the earliest conversion date for contingent convertible senior
notes, for the five years ended after December 31, 2013 are as follows:
Principal Amount
of Debt Securities
($ in millions)
2014 ............................................................................................................................... $ —
2015 ............................................................................................................................... 1,661
2016 ............................................................................................................................... 905
2017 ............................................................................................................................... 4,301
2018 ............................................................................................................................... 1,113
2019 and thereafter ........................................................................................................ 5,250
Total ......................................................................................................................... $ 13,230
Term Loan
In November 2012, we established an unsecured five-year term loan credit facility in an aggregate principal
amount of $2.0 billion for net proceeds of $1.935 billion. Our obligations under the facility rank equally with our
outstanding senior notes and contingent convertible senior notes and are unconditionally guaranteed on a joint and
several basis by our direct and indirect wholly owned subsidiaries that are subsidiary guarantors under the indentures
for such notes. Amounts borrowed under the facility bear interest at our option, at either (i) the Eurodollar rate, which
is based on the London Interbank Offered Rate (LIBOR), plus a margin of 4.50% or (ii) a base rate equal to the greater
of (a) the Bank of America, N.A. prime rate, (b) the federal funds effective rate plus 0.50% per annum and (c) the
Eurodollar rate that would be applicable to a Eurodollar loan with an interest period of one month plus 1% per annum,
in each case, plus a margin of 3.50%. The Eurodollar rate is subject to a floor of 1.25% per annum, and the base rate
is subject to a floor of 2.25% per annum. Interest is payable quarterly or, if the Eurodollar rate applies, it may be payable
at more frequent intervals.