Transaction Terms
In connection with the merger transaction, each Chesapeake share was converted into the right to receive $11.00 in cash and 0.628 of a share of Park common stock. Upon closing, Park’s total outstanding share count is approximately 240 million shares, with former Chesapeake shareholders owning approximately 16 percent and existing Park stockholders owning approximately 84 percent of the combined Company’s common equity. As a result of the acquisition, Chesapeake common shares will cease trading on the New York Stock Exchange effective before the market opens today.
At closing, Park drew on the $850 million five-year tranche from its previously announced unsecured delayed draw term loan agreement and terminated the commitment with respect to the $100 milliontwo-year tranche. Proceeds are being used to pay a portion of the merger consideration and to repay approximately $352 million of Chesapeake debt, including its $225 million term loan facility and two property mortgages with maturities scheduled in 2020. Giving effect to the acquisition, Park now has a total of $4.3 billion of outstanding debt, including $234 million of unconsolidated joint venture debt. Park also has over $1.2 billion in liquidity between cash on hand and its $1 billion undrawn revolver.
In connection with the acquisition, Park is assuming Chesapeake’s interest rate swap agreement, which fixesone-month Libor at 1.86 percent for a portion of Park’s five-year unsecured delayed draw term loan up to the $225 million notional amount of the swap. Park also is assuming approximately $310 million of existing mortgage loans secured by four of Chesapeake’s properties with maturities ranging from 2022 to 2026 and that bear interest at fixed rates ranging from 4.11% to 4.90% per year.
Prior to closing the transaction, Chesapeake completed the previously announced sale of its two New York City assets, Hyatt Herald Square New York and Hyatt Place New York Midtown South, for total gross proceeds of $138 million. As part of that sales transaction, approximately $85 million of mortgage debt was defeased.
Advisors
BofA Merrill Lynch and Barclays acted as financial advisors and Hogan Lovells acted as legal counsel to Park. J.P. Morgan Securities LLC acted as exclusive financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Polsinelli PC acted as legal counsel to Chesapeake.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. All such forward-looking statements are based on current expectations of management and therefore involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Forward-looking statements include, but are not limited to, statements related to Park’s current expectations regarding the performance of its business, financial results, liquidity and capital resources, the effects of competition and the effects of future legislation or regulations, the declaration and payment of future dividends, statements about the acquisition of Chesapeake by Park and statements that address operating performance, events or developments that Park expects or anticipates will occur in the future, including
