May 13 Bank of New York Mellon Corp is
appealing against a district court judgment that allowed
Chesapeake Energy Corp to redeem $1.3 billion of notes
six years before their maturity date, a court filing showed.
Last week, U.S. District Judge Paul Engelmayer in Manhattan
ruled that Chesapeake's March 15 notice to redeem the 6.775
percent notes, which would have matured in 2019, did not come
He rejected the contention by Bank of New York Mellon that
Chesapeake had missed a deadline a month earlier. The redemption
price for the notes was 100 cents on the dollar plus interest.
The dispute flared when Chesapeake, hoping to take advantage
of lower interest rates, decided to call the bonds six years
earlier than the maturity date to avoid millions of dollars in
Bank of New York Mellon, trustee of the notes, opposed the
redemption, saying the No. 2 U.S. natural gas company waited too
long to tell investors of its plans.
Chesapeake complained that Bank of New York Mellon failed to
distinguish between a deadline for when notice must be given and
when the redemption date occurs.
After last week's court victory, Chesapeake said it intends
to refinance the notes and that decision by Judge Engelmayer
will save it more than $100 million in interest payments.
A notice of Bank of New York Mellon's appeal was filed on
May 11. The appeal will be heard by the U.S. Court of Appeals
for the Second Circuit, according to a filing.
The case is Chesapeake Energy Corp v. Bank of New York
Mellon Trust Co, U.S. District Court, Southern District of New
York, No. 13-01582.