Chesapeake to be delisted from NYSE

The news follows the announcement that Chesapeake subordinated notes holders have formed an ad-hoc group that has entered into discussions with financial advisor, Houlihan Lokey over financial restructuring alternatives.

Possible alternatives under discussion include a “substantial reduction” in Chesapeake’s leverage that could significantly devalue the corporation’s stock to “nominal or no value”.

Chesapeake has achieved waivers of compliance with lenders of the company’s $250m Senior Secured Credit Facility that waives certain financial condition covenants through October 31, 2008.

The company does not expect to be in compliance with the Facility by the end of October and will attempt to replace or amend the Senior Secured Credit Facility or obtain waivers from the company’s lenders.

Should Chesapeake default then the company could be required to repay all amounts outstanding under the Senior-secured credit facility.

Despite this Chesapeake’s president and chief executive officer Andrew Kohut said they were “encouraged” by the progress of the restructuring plan “particularly with the discussions we have had with the holders of the senior subordinated debt and their advisor.”

Last month, German carton manufacturer Edelmann Group sparked speculation of a possible takeover of Chesapeake after it increased its stake in the company to 13.4%, making it the second largest single stakeholder.

Chesapeake employs approximately 5,400 people across 45 locations in Europe, North America, Africa and Asia.

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