Chesapeake Energy Corp. (NYSE: CHK) has delivered notice to the depositary to redeem its 6.775% senior notes due 2019 at par.

Chesapeake intends to redeem the notes as part of a broader refinancing of its outstanding debt obligations, according to the release.

In addition, Chesapeake is continuing to pursue its lawsuit requesting the U.S. District Court for the Southern District of New York confirm that the notice to redeem the notes the company issued March 15 will be timely and effective to redeem the notes at par, with payment to be made within 60 days after such notice, pursuant to the special early redemption provision of the notes.

On March 14, the court denied Chesapeake’s request for a preliminary injunction concerning The Bank of New York Mellon Trust Co.’s obligation to accept the company’s notice of special early redemption at par. Although Chesapeake did not receive the preliminary order that it had requested from the court, it did receive what the company views as comparable relief. In particular, the court stated multiple times that it is “overwhelmingly” likely that the company's notice to redeem at par will not be determined by the court to be a notice to redeem under the “make-whole” provision of the indenture, even if the notice to redeem at par is ultimately deemed untimely, according to the release.

According to the release, the court also stated that “it is overwhelmingly likely that an untimely notice of special early redemption would be held null and void, and not as requiring redemption under the entirely different make-whole price. Lest the point be unclear, I will add this: it would be reckless for any party or entity to condition its conduct or order its legal or business affairs on the assumption that the court would rule otherwise.”

Although these statements were preliminary, Chesapeake thinks, based on these statements, that a notice to redeem at par, if it is ultimately found to be untimely, would be null and void, and the notes would remain outstanding. The company has proceeded with the issuance of the notice of a special early redemption at par.

The notice provides, as required in the governing indenture, that payment will be made on May 13, pursuant to the special early redemption provision of the notes, subject to a favorable ruling by the court that such notice is timely and effective.

According to the release, even though the court preliminarily observed that the language of the supplemental indenture was ambiguous with respect to the deadline for notice of the special early redemption and that the court found preliminarily that the trustee’s and the noteholders’ argument on the deadline is “slightly better,” the company thinks that this view was based solely on the limited information presented to the court so far in the accelerated litigation process that began March 8. The company thinks it will prevail on this issue when the expedited litigation process has been completed.

Chesapeake Energy Corp. is an independent oil and gas company engaged in the acquisition, exploration, development, and production of natural gas and oil properties in the US. The company is headquartered in Oklahoma City.