Chesapeake Wins Suit Against Bondholders, Mellon Bank on $1.3 Bln Bond Redemption; Shares Rise 1%

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Chesapeake Energy ( CHK ) won its lawsuit against Mellon Bank ( BK ) and Chesapeake bondholders regarding Chesapeake's effort to redeem $1.3 billion of 6.775% senior notes at par six years before they were due, thus saving the company $100 million in interest.

Mellon Bank, the trustee for the notes, attempted to block the redemption by claiming that Chesapeake did not file the notice at the appropriate time, specifically citing language in the bond documentation which specifies the time period in which CHK would have to inform bondholders of the buyback plan. CHK filed the notice on March 15 which bondholders and Mellon claimed was insufficient.

U.S. District Court Judge Paul Engelmeyer ruled that the March 15, 2013 notice to redeem the notes was timely and effective pursuant to the Special Early Redemption provision of the notes.

Chesapeake is now clear to begin redemption of the notes with payments expected to be made on May 13, 2013.

CHK is up 0.58% to $19.21, within a 52-week range of $13.32 to $22.97.



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This article appears in: Investing , Commodities

Referenced Stocks: BK , CHK

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