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Strategies & Market Trends : BAK - Investing -- Ignore unavailable to you. Want to Upgrade?

To: Flipper2058 who wrote (2716)	5/17/2012 8:56:53 AM
From: DoggyDogWorld	4 Recommendations Read Replies (1) \| Respond to of 3249

Re: CHK never sees a dollar it doesn't want to borrow "unsecured"...but they took out their LOC (""which Chesapeake will use to repay a secured revolving credit line"" ) So it puts them right up front and since it is "unsecured" allows them to charge usery rates. The bridge loan was not 3 times over-subscribed for nothing....It puts the banks in the bridge loan in the catbird seat to make CHK dance and milk fees when they don't make these aggressive schedules. Exactly. On paper this unsecured loan is parri passu with all the other unsecured paper. But, to paraphrase Orwell, "some animals are more parri passu than others". If CHK dumps assets quickly the new lenders get repaid in full while the old lenders are stuck with cold leftovers. If CHK fails to sell assets according to the schedule, various penalty features of the new loan kick in and tighten the noose. The new lenders will generously offer to loosen the noose a little, of course, in exchange for fully secured liens.....