Chesapeake’s Bonds Tumble as Early Redemption Sought in Lawsuit

Chesapeake Energy Corp. (CHK)’s bonds fell by the most in almost eight months after the oil and natural gas producer sued trustee Bank of New York Mellon Corp. to redeem $1.3 billion of debt early and avoid new interest.

The company’s $1.3 billion of 6.775 percent notes due March 15, 2019, dropped 1.25 cents to 104 cents on the dollar to yield 5.97 percent as of 9:46 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The securities fell 2.5 cents July 16.

Chesapeake, which sued the trustee in Manhattan federal court on March 8, is asking a judge to confirm that a notice issued on or before March 15 will allow it to redeem those notes at par, or 100 cents, the Oklahoma City-based company said in a statement.

To contact the reporter on this story: Richard Bravo in New York at rbravo5@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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