UPDATE 1-Chesapeake to pay down bulk of $4 bln term loan

HOUSTON Oct 22 (Reuters) - Chesapeake Energy Corp plans to pay off more than half of a pricey $4 billion bridge loan after receiving $2.8 billion in cash from the sale of some of its oil and gas properties in the Permian Basin.

The loan, made in May, was a lifeline at the time for the U.S. energy company that was staring at a funding shortfall of about $10 billion. So far this year, Chesapeake has sold about $12 billion of its assets, a situation that has alleviated its liquidity crunch.

Chesapeake's investment bankers on the Permian deal, Goldman Sachs and Jefferies Group, provided the loan. In May, Chesapeake replaced $4 billion in existing debt with the new $4 billion that came at a steep 8.5 percent interest rate, and would rise to more than 11 percent if the company did not pay it off by the end of the year.

Chesapeake will reduce the existing amount on the loan to $1.2 billion in about a week and plans to pay its full balance by the end of the year, the Oklahoma City, Oklahoma, c ompany said.

Chesapeake sold the Permian acreage to a subsidiary of Royal Dutch Shell < RDSa.L>, C hevron Corp and privately held Enervest Ltd. The assets sold accounted for nearly 6 percent of Chesapeake's production in the second quarter.

Total proceeds from the deals are about $3.3 billion. Payment of the remaining $500 million are subject to title and environmental contingencies, the company said.

The Permian Basin spans west Texas and eastern New Mexico.

Chesapeake shares dipped 2 cents to close at $20.79 on the New York Stock Exchange on Monday.