Chesapeake Energy Suspends Preferred Dividends; Will Pay Down Debt
January 22 2016 - 9:04AM
Dow Jones News
By Chelsey Dulaney
Chesapeake Energy Corp. on Friday said it has suspended
dividends on its preferred shares as the natural-gas producer moves
to conserve cash and pay down its debt.
Shares of Chesapeake, down 82% in the past year, added 5.4% to
$3.74 a share in premarket trading.
Chesapeake said the move will save the company $170 million a
year, which it can use pay down debt while its debt securities are
trading at significant discounts.
"Given the current commodity price environment for oil, natural
gas and natural gas liquids, we believe that redirecting this cash
toward debt retirement provides better returns for the company,"
said Chief Executive Doug Lawler.
Chesapeake said the dividend suspension doesn't constitute a
default under its revolving credit facility or bond indentures.
A former Wall Street darling once headed by famed wildcatter
Aubrey McClendon, Chesapeake sold billions of dollars in debt to
help finance oil and gas purchases in recent years. But the tumble
in natural-gas prices has hurt the company, which has posted a
string of quarterly losses.
Chesapeake has been working to reduce its $11.6 billion debt
load. In December, The Wall Street Journal reported that the
company was working with restructuring advisers at Evercore
Partners Inc. to shore up its balance sheet.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
January 22, 2016 08:49 ET (13:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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