| NEW YORK, March 8
NEW YORK, March 8 Chesapeake Energy Corp
filed court papers Friday saying it has the right to redeem $1.3
billion in notes.
Chesapeake asked for a declaratory judgment against The Bank
of New York Mellon Trust Company N.A. to confirm that Chesapeake
has the right to redeem the notes.
Bank of New York Mellon serves as the indenture trustee for
the notes, according to the complaint, filed in Manhattan
"Chesapeake has recently learned that BNY Mellon is
operating under the misunderstanding that the deadline for
issuing such notice has already passed," the company's attorneys
wrote in the complaint.
In its complaint, Chesapeake said it had until March 15 to
notify noteholders of its intention to redeem the notes. The
notes have a principal amount of $1.3 billion, an interest rate
of 6.775 percent, and are due in 2019, according to the
The bank failed to distinguish the difference between a
deadline for when notice must be given and when the redemption
date occurs, the complaint said.
The Bank of New York Mellon has informed Chesapeake that it
"will not cooperate or otherwise participate in the redemption
process," according to the complaint. The bank's position is
that any redemption occurring after March 15 would require
Chesapeake "to pay the $400 million make whole to the
Should the court not grant the declaratory relief,
Chesapeake would have no remedy at law as a result of the bank's
"error," the complaint said.
"Time is of the essence," the complaint said. "This is not a
typical contractual dispute where one party's misreading of an
agreement can be remedied after the fact."
The U.S. Securities and Exchange Commission is investigating
Chesapeake and its outgoing CEO Aubrey McClendon for a
controversial perk that granted him a share in each of the
natural gas producer's wells. In January, McClendon announced
his resignation, effective April 1.
A spokesman for Bank of New York Mellon declined to comment
on Friday's court filing by Chesapeake.