© 2014 The Texas Lawbook.
By Mark Curriden, JD
Senior Writer for The Texas Lawbook
(June 10) – Chesapeake Energy Corp. has turned to Baker Botts partner and capital markets expert Hillary Holmes to leads its legal efforts to spin off its oilfield services operations.
The spin off, named Seventy Seven Energy, is part of Chesapeake’s efforts to cut spending in high cost units in an attempt to eliminate a $1 billion gap in the Oklahoma City-based company’s cash flow and capital expenditures.
The value of the new company is expected to be about $2.2 billion. Chesapeake has applied to list shares of Seventy Seven Energy on the New York Stock Exchange, but Chesapeake will not retain ownership of any of the new company’s stock.
David Treadwell, the current chief counsel and vice president at Chesapeake, is expected to be the new general counsel for Seventy Seven Energy.
The legal aspects of the spin off were engineered by Holmes, who is widely regarded as one of the leading capital markets and securities offering experts in the energy sector.
Holmes says the Chesapeake spin off is unique because the spin off, which is a wholly owned subsidiary of Chesapeake, was already reporting to the U.S. Securities and Exchange Commission when the process started, which means that it has already filed 10Ks and other SEC reports with independent financial statements.
Holmes, who is also on the team representing Noble Corp. in its spin-off of some of its offshore drilling rigs, says Baker Botts is seeing more such spin-offs as energy companies realign their assets, streamline their business models and allow captured businesses to maximize their capabilities.
Chesapeake officials say they engaged Holmes because of her expertise and because she has handled several matters involving the oil and gas company in the past. For example, she was counsel to the underwriters in Chesapeake’s MLP (Chesapeake Midstream Partners) in its IPO in 2010. Chesapeake Midstream became Access Midstream Partners in 2012 when Chesapeake pared its investment in CHKM. But Holmes has continued to represent Access Midstream Partners, handling more than 15 securities offerings for the company.
Holmes also worked on the formation and IPO of Chesapeake’s publicly traded royalty trust called Chesapeake Granite Wash Trust.
Besides Baker Botts, Chesapeake already hired Oklahoma-based McAfee & Taft to represent the company and Wachtell, Lipton, Rosen & Katz to advise the board of directors.
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