Chesapeake loses round in courtroom bond battle

Thu Mar 14, 2013 4:32pm EDT

* Chesapeake sought to redeem $1.3 bln notes early

* Bondholders, trustee BNY Mellon opposed redemption

NEW YORK, March 14 (Reuters) - Chesapeake Energy Corp on Thursday failed to win a court order allowing it to redeem $1.3 billion of notes early at a favorable price, a setback for the second-largest U.S. natural gas company as it tries to close a potential $4 billion cash shortfall this year.

The decision was announced by U.S. District Judge Paul Engelmayer at a hearing in Manhattan federal court.

Bond trustee Bank of New York Mellon Corp and a group of investors holding $250 million of the notes had opposed the proposed redemption, saying it would cause irreparable harm.