Chesapeake Adopts Poison Pill After Shares Plummet



Chesapeake Adopts Poison Pill After Shares Plummet
While the company has pushed to transition into an oil explorer, that move could prove pointless after crude's historic crash.

(Bloomberg) -- Chesapeake Energy Corp. adopted a poison pill after the oil-price crash and coronavirus pandemic sent the debt-burdened shale pioneer’s shares tumbling.

The shareholder rights can be exercised if a person or group acquires 4.9% or more of Chesapeake’s outstanding common stock, the company said Thursday in a statement. Under those conditions, holders of the rights can buy common shares at a 50% discount or Chesapeake can exchange each right for one share.

Chesapeake was already in a precarious position before the Covid-19 outbreak sent crude demand plummeting. At its height more than a decade ago, the producer was a $37.5 billion company led by Aubrey McClendon, an outspoken advocate for the gas industry. But Chesapeake’s success at extracting the fuel from deeply buried rock contributed to a massive gas glut. While the company has pushed to transition into an oil explorer, that move could prove pointless after crude’s historic crash.

Earlier this month, Chesapeake shareholders approved a reverse stock split of one share for as many as 200 shares. The company is one of the most endangered oil producers, with $192 million of bonds coming due in August, out of a total debt load of more than $9 billion.

To contact the reporter on this story:
Christine Buurma in New York at cbuurma1@bloomberg.net

To contact the editors responsible for this story:
Simon Casey at scasey4@bloomberg.net
Christine Buurma, Patrick McKiernan



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