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Chesapeake Energy Loses $1.3 Billion Bond Redemption Appeal: Will a Handful of Missing Words Cost $400 Million?
26 November 2014
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The conditional bond redemption feature that we introduced to the market can save a company from significant economic risk.
An understanding between a company and the financing arranger about the agreement’s meaning will not necessarily prevail, if it has not been communicated to investors.
Under New York law, if a court finds contract language unambiguous, it will ignore external evidence of the parties' intent, however clear. A court may find wording unambiguous even if its meaning is disputed and subject to multiple interpretations.
The description of material terms in a bond disclosure document should be drafted and negotiated with a similar level of care as the indenture that governs the bonds.
Borrowers, arrangers and their counsel should take special care to make the terms of financing agreements clear. Overlooking a few words can make hundreds of millions of dollars' worth of difference.
David A. Brittenham
Jeffrey E. Ross
Ramya S. Tiller
UK Modern Slavery Act Transparency Statement
Debevoise Women's Review