U.S. District Judge Paul Engelmayer on Tuesday set a trial date of April 23 tentatively for Chesapeake Energy Corp's (CHK) disagreement with investors over its decision to redeem $1.3 billion in notes early.
The natural gas producer said on March 8 that it was seeking a declaratory judgment in the United States District Court for the Southern District of New York with respect to redeeming its 6.775 percent Senior Notes due 2019 at par.
Specifically, the company requested the court to confirm that a notice to redeem issued on or before March 15, as specified in the governing indenture, would be timely and effective to redeem the notes at par, with payment to be made 60 days after such notice.
Chesapeake said at that time that it desires to redeem the notes as part of a broader refinancing of its outstanding debt obligations.
The defendant in the action initiated by Chesapeake was the indenture trustee for the notes, The Bank of New York Mellon Trust Corporation, N.A. (BK)
On March 14, the court denied Chesapeake's request for a preliminary injunction concerning The Bank of New York Mellon Trust Company's obligation to accept the company's notice of Special Early redemption at par.
However, according to the company, 'the Court stated multiple times that it is "overwhelmingly" likely that the company's notice to redeem at par will not be determined by the Court to be a notice to redeem under the "make-whole" provision of the indenture, even if the notice to redeem at par is ultimately deemed untimely.'
On March 15, Chesapeake delivered notice to the Depositary to redeem the 6.775 percent Senior Notes due 2019 at par.
Engelmayer has now scheduled the trial two weeks earlier than requested by the firms. This is to provide time to appeal the decision before the redemption of notes is formally executed on May 13 or May 14.
CHK fell 5.1 percent on Tuesday to close at $21.04 and dropped 1.6 percent in the extended trade.
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