April 13 (Reuters) – Chesapeake Energy Corp
shareholders on Monday voted in favor of a reverse stock split,
a move that is expected to boost the debt-laden shale producer’s
share price to avoid a delisting that could trigger calls for
some immediate debt repayment.
Creditors holding more than $1 billion of Chesapeake debt
have the right to demand that the company repurchase their notes
if shares are removed from the New York Stock Exchange (NYSE),
according to the company’s annual regulatory filing in February.
Nearly 76% of the total votes cast at Chesapeake’s meeting
were in favor of the reverse stock split, which the board
subsequently decided will be set at 1:200, while 23% voted
against, the company said https://bit.ly/2K0wdEG. The remaining
votes were abstentions.
After the reverse stock split becomes effective on Tuesday,
22.5 million shares of Chesapeake will trade on the NYSE.
The reverse stock split would help bring the stock price
above $1 and meet the listing norm that mandates a stock’s
average trading price should be above $1 per share over a 30-day
Shares of the company fell 7% in extended trading, having so
far fallen 81% this year to close at 16 cents in Monday’s
The shale gas pioneer had about $9 billion in total debt at
the end of 2019; it borrowed aggressively to buy and drill
properties but has been struggling as gas prices have plummeted
to $1.70 per million British thermal units (mmBtu) from more
than $13 in 2008.
The company completed a term-loan refinancing earlier this
year, with the support of 99% of debt holders, and also
refinanced longer-dated notes that will pare $1 billion off its
debt pile by paying the bond holders between 62 cents and 70
cents per dollar on the older notes.
(Reporting by Arathy S Nair in Bengaluru; Editing by Sriraj
Kalluvila and Shinjini Ganguli)