Aubrey McClendon is returning to his wildcatter roots as the ousted co-founder of Chesapeake Energy Corp. prepares to tap the junk-bond market to help finance what will be the most highly leveraged energy exploration company.
A unit of McClendon’s American Energy Partners LP is seeking $1.4 billion, according to a statement from Moody’s Investors Service, which assigned the debt a Caa1 rating. That grade, denoting securities of “very high risk” and “poor credit standing,” reflects undeveloped reserves and“prospective” acreage in Permian Basin drilling rights being purchased from closely held Enduring Resources.
American Energy management and two partner firms are putting up $1.15 billion of equity, leaving potential creditors to finance the bulk of the purchase in a business that will be the most highly leveraged among energy exploration and production companies rated by Moody’s, according to the statement. McClendon previously saddled Chesapeake with $13.3 billion of debt and turned to asset sales in 2012 after falling gas prices led the company to warn it might not be able to service its obligations.
“The underwriters have the confidence they will be able to raise money despite the baggage that comes with Aubrey,” Stuart Miller, a Moody’s analyst in New York said in a telephone interview. “He’s raised a lot of equity and there’s also the technical expertise that this management brings with it.”You can read the whole article by clicking right here.
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