Chesapeake Energy Corp. is preparing to file for bankruptcy as soon as this week.
According to media reports, the Oklahoma City-based oil and gas company is in the final stages of negotiating a roughly $900 million debtor-in-possession loan to support its operations while under Chapter 11 bankruptcy protection.
Chesapeake Energy is also in talks with creditors to roll up some of its existing debt and make it part of the bankruptcy loan, bringing the total debtor-in-possession financing closer to $2 billion. The company is reeling under a mountain of debt totaling more than $9 billion.
Chesapeake is also attempting to negotiate an equity infusion from creditors to help it emerge from bankruptcy proceedings. The company plans to complete its negotiations with its creditors and file for bankruptcy as soon as this Thursday.
If Chesapeake Energy emerges from bankruptcy, creditors that include Franklin Resources Inc. will take over Chesapeake in exchange for eliminating more than $7 billion of its debt under the outlines of a plan, according to a report by Reuters news agency. Franklin is among Chesapeake’s most significant creditors, holding large portions of its debt.
Chesapeake, which employs about 2,300 people, skipped an interest payment on debt due on Monday. Another debt obligation is due on July 1. In May, the company warned it might seek bankruptcy protection, and added that there was substantial doubt about its ability to continue as a going concern.
