Chesapeake Energy Holders Approve 1-For-200 Reverse Stock Split

Chesapeake Energy holders approved a 1-for-200 reverse stock split. The move is designed to increase the shale-oil producer's share price and avoid a delisting.
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Chesapeake Energy  (CHK) - Get Report said that after a special meeting of shareholders the board approved a 1-for-200 reverse stock split in an effort to increase the shale-oil producer's share price and avoid a delisting. 

Shares of the Oklahoma City company at last check were down 3.1% to 15 cents. A year ago Chesapeake Energy was trading at $2.91 a share.

In a reverse split, a company consolidates its share base to create a smaller number of proportionally more valuable shares. 

Chesapeake Energy said the reverse stock split was intended to increase the trading price of its common shares to satisfy the $1-a-share minimum bid price required for listing on the New York Stock Exchange.

Chesapeake said in a regulatory filing Monday that the NYSE had notified the company in December that it was no longer compliant with the exchange's continued listing standards. That's because the average trading price of Chesapeake common shares over a 30-consecutive-trading-day-period had fallen below $1. 

Creditors holding more than $1 billion of Chesapeake debt have the right to demand that the company repurchase their notes if its shares are removed from the NYSE, the company said in its annual regulatory filing in February.

After the reverse split becomes effective, 22.5 million shares of Chesapeake will trade on the NYSE.

In February, Chesapeake Energy said it was planning a reverse stock split after reporting  fourth-quarter results that missed Wall Street's expectations.

At the time, Doug Lawler, president and CEO, referred to "the challenging macro pricing environment," which had caused "a much softer commodity-price outlook in 2020."

The economic blowback from the coronavirus pandemic and an oil-price war between Russia and Saudi Arabia have caused oil prices to tumble.

Last month, Reuters reported that Chesapeake had been in touch with lawyers and investment bankers who specialize in reworking debt.