Chesapeake wins breathing space with $3 billion loan (I bet this will hit taxpayers someday.)

[No Elephants]

Meanwhile, I love the term "funding gap." Lot of that going around.

Individuals who can't pay their loans are broke ass bums who need to declare bankrupty. Corporations that can't pay their loans have funding gaps and get to borrow $3 billion more.

I once heard a very successful bankruptcy lawyer say that every bankrupt company he had ever dealt with said the same thing: "We're not bankrupt. We just have a cash flow problem."

Carrick Mollenkamp and Matt Daily

Fri May 11, 2012 8:37pm EDT

(Reuters) - Chesapeake Energy Corp said it had received a $3 billion loan from Goldman Sachs and Jeffries Group that will give it breathing room to sell assets and close a funding gap this year.

The company, which has been embroiled in a corporate governance crisis that prompted its move to replace co-founder Aubrey McClendon as chairman, said the new unsecured loan will be used to repay money borrowed under its existing $4 billion revolving credit facility.

<snip>

The company, the nation's second largest natural gas producer, said it plans to sell $9.0 billion to $11.5 billion in assets this year.

<snip>

With the new loan, Chesapeake will have a better position in bargaining with buyers who may have sought to pressure the company into accepting low bids, according to a person familiar with the situation.

<snip>

Still, since Chesapeake was taking the unusual step of getting a loan to pay off an existing revolving debt facility and not securing it with assets, the company did appear to be making a sound deal.

"However, given Chesapeake's current situation, it's likely to surmise that someone is going to be left holding the bag on this one," Baha said.

<snip>

(Reporting by Matt Daily, Jennifer Ablan, Jon Stempel, Michael Erman, Ernest Scheyder and Anna Driver; Editing by Jan Paschal and Bernard Orr)

http://www.reuters.com/article/2012/05/12/us-chesapeake-idUSBRE84A1DQ20120512

Whoever gets left holding the bag, Wall Street has made a lot of money on Chesapeake and will make more before this is over. And I bet the top level employees of Chesapeake will have done fine, too.