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Oil and Gas

Chesapeake investors vote for reverse stock split to boost share prices

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 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 period.

Shares of the company fell 7% in extended trading, having so far fallen 81% this year to close at 16 cents in Monday’s trading session.

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)

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