OKLAHOMA CITY, April 23, 2020 /PRNewswire/ -- Chesapeake
Energy Corporation (NYSE: CHK) ("Chesapeake") announced today that
its Board of Directors adopted a shareholder rights plan designed
to protect the availability of Chesapeake's net operating loss
carryforwards ("NOLs") under the Internal Revenue Code ("Section
382 Rights Plan").
As of December 31, 2019,
Chesapeake had U.S. federal NOLs of approximately $7.6 billion available to offset its future
federal taxable income. Chesapeake's ability to use these NOLs
would be substantially limited if it experienced an "ownership
change" within the meaning of Section 382 of the Internal Revenue
Code. In general, a company would undergo an ownership change if
its "5-percent shareholders" (determined under Section 382)
increased their collective ownership of such company's stock by
more than 50 percentage points over a rolling three-year
period.
The Section 382 Rights Plan is similar to those adopted by other
public companies with significant NOLs. The Section 382 Rights Plan
is designed to prevent any "ownership change" that could negatively
impact the availability of its NOLs, and is intended to help ensure
that the Board of Directors is in the best position to discharge
its fiduciary duties.
Under the Section 382 Rights Plan, the rights will initially
trade with Chesapeake's common stock and will generally become
exercisable only if a person (or any persons acting as a group)
acquires 4.9% or more of Chesapeake's outstanding common stock. The
Section 382 Rights Plan does not aggregate the ownership of
shareholders "acting in concert" unless and until they have formed
a group under applicable securities laws. If the rights become
exercisable, all holders of rights (other than any triggering
person) will be entitled to acquire shares of common stock at a 50%
discount or Chesapeake may exchange each right held by such holders
for one share of common stock. Under the Section 382 Rights Plan,
any person which currently owns 4.9% or more of Chesapeake's common
stock may continue to own its shares of common stock but may not
acquire any additional shares without triggering the Section 382
Rights Plan. Chesapeake's Board of Directors has the discretion to
exempt any person or group from the provisions of the Section 382
Rights Plan.
The Section 382 Rights Plan will expire on the close of business
on the day following the certification of the voting results for
the 2021 annual meeting, unless Chesapeake's shareholders ratify
the Section 382 Rights Plan at or prior to such meeting, in which
case it will continue in effect until April
22, 2023, unless terminated earlier in accordance with its
terms.
Additional information about the Section 382 Rights Plan is
available on a Form 8-K filed by Chesapeake with the U.S.
Securities and Exchange Commission.
Headquartered in Oklahoma
City, Chesapeake Energy Corporation's (NYSE: CHK) operations
are focused on discovering and developing its large and
geographically diverse resource base of unconventional oil and
natural gas assets onshore in the United
States.
This news release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are statements other than statements of historical fact.
They include statements regarding the operation or effects of the
Section 382 Rights Plan and to the use of NOLs to offset future
taxable income. Although we believe the expectations and forecasts
reflected in the forward-looking statements are reasonable, we can
give no assurance they will prove to have been correct. They can be
affected by inaccurate or changed assumptions or by known or
unknown risks and uncertainties. Important risks, assumptions and
other important factors that could cause future results to differ
materially from those expressed in the forward-looking statements
are described under "Risk Factors" in Item 1A of our annual report
on Form 10-K for the year ended December 31,
2019. Chesapeake undertakes no obligation to release
publicly any revisions to any forward looking statements, to report
events or to report the occurrence of unanticipated events.
INVESTOR
CONTACT:
|
MEDIA
CONTACT:
|
Brad Sylvester,
CFA (405)
935-8870 ir@chk.com
|
Gordon
Pennoyer (405)
935-8878 media@chk.com
|
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SOURCE Chesapeake Energy Corporation