Chesapeake Energy suspends quarterly preferred stock dividends

• Chesapeake Energy (NYSE:CHK) has suspended payment of dividends on each series of its outstanding convertible preferred stock effective immediately.
• Suspension of the dividend does not constitute an event of default under any of the company's debt instruments.

Comments

[sbrncra]

Shorting today looks great but very dangerous

[sbrncra]

With this few shares, and the right pockets, renegotiated debt at todays interest prices, this is ripe for pickin

Maybe a positive surprise in the making!

[itsacasino]

first LNG shipment to China in 13 months www.naturalgasintel.com/...

[itsacasino]

goodbye @ $19.50 cost basis $350.00+

[bondsmoker]

I tried to short just now - no shares available.

[itsacasino]

perfect timing WTF

[pitecantropus74]

The principal CEO of this corporation never intended to benefit common shares, he stopped dividend payments long ago and while cash was getting burned like there was no tomorrow he did continue to pay prefered shares dividend until chk finally fell down the cliff . You could see this person was aware of chk road to disaster long ago ,during his management he never intended any personal buyback of common shares in spite of his multimillion bonuses he was unfairfully awarded . He should be put under investigation by the SEC. You all know his name ,no need to repeit it. Even though i agree environment was not the best for natgas producers if chk remains in coma it should fire this CEO and others for disguise their true malicious intentions against common stock holders.

[pitecantropus74]

Too little too late. All managemmet specially CEO should be suspended immediatelly. They knew what was happening and keep burning cash through prefered payments.

[pitecantropus74]

The principal CEO of this corporation never intended to benefit common shares, he stopped dividend payments long ago and while cash was getting burned like there was no tomorrow he did continue to pay prefered shares dividend until chk finally fell down the cliff . You could see this person was aware of chk road to disaster long ago ,during his management he never intended any personal buyback of common shares in spite of his multimillion bonuses he was unfairfully awarded . He should be put under investigation by the SEC. You all know his name ,no need to repeat it. Even though i concur environment was not the best for natgas producers and if future chk remains in coma it should fire this CEO and others for disguising their true malicious intentions against common stock holders.

[karondongotbanned]

wow CHK has nice gains today. "is recovery on its way"? LOL

[taketake1]

No, but hopefully a BAILOUT

[bondsmoker]

@taketake1

Unsecured bonds all trading in single digits.

There's just no hope for CHK.

[User 40906785]

does it sound reasonable to have a $160M market cap
and 9.5$Billion in debt? That tells the who story 58 times more debt
than market cap.

[karondongotbanned]

yes it does

[NatGasGuru]

June WTI down 45%, hovering just over $11, and CHK up 10%. Makes perfect sense.

[sbrncra]

No shares

[bondsmoker]

Last trade on 2L was 8% of par.

Not the unsecureds - the 2L.

[taketake1]

Does that seem reasonable?

[bondsmoker]

Does -$37 per barrel of oil seem reasonable?

[taketake1]

Well hedged correct? Bailout coming. IMO the debt is drastically underpriced

[I_like_preferreds]

this is their chance, they can "buy" oil, get paid and put into the ground, just need to reverse the pump

[bondsmoker]

Oil is trading below $0.

Is this good for CHK?

[dukenukum]

I too am curious
.. how does it work ... oil trading at one point at - 35.00 a barrel .. are they paying 35.00 a barrel to take their oil ??

[bondsmoker]

@lukkaudukenukum

I believe that's the situation - negative price means paying to take the oil.

In real-world trading, could make sense - if tanks are full, and no place to put it, then cost would be real high to take physical possession - would have to factor in shipping to some far-flung storage location, or paying an oil tanker-truck to drive around the block until storage opens up in the tanks.

Crazy times.

[DT Now]

Correct me if I'm wrong, but don't CHK's hedges become more valuable as oil prices continue to plummet? I mean, considering they pay royalties based on market price, not hedged price. I would expect a bunch of companies not well-hedged will be declaring BK, which means less competition, and higher oil prices.

[bondsmoker]

"I would expect a bunch of companies not well-hedged will be declaring BK, which means less competition, and higher oil prices"

When E&Ps go bankrupt, they don't generally reduce production. Often the opposite - eliminating debt service expense frees up cash to increase Capex.

[Peter Rocca]

Great observation!! Thanks

[mpmassey]

@DT Now Lol.

[karondongotbanned]

i feel bad for this company. this is going to end up the same as MHR...

[aj485]

They may not be breaching debt covenants, but this will be the 5th quarter of preferred dividend suspension. Once they have suspended preferred dividends for 6 quarters, even if the suspended quarters are non-consecutive, the preferred shareholders get to place 3 new members on the board of directors. Look for the BK to occur before that happens, so in the next 3 months.

[vibeserv]

They did pay the cumulative amount owed last time. I am thinking that might reset the clock on the 5 quarter requirement

[aj485]

@vibeserv Well here's the clause from the prospectus of one of the preferreds, CHKVP www.sec.gov/...
"(kk) “Voting Rights Triggering Event” shall mean the failure of the Company to pay dividends on the Preferred Stock with respect to six or more quarterly periods (whether or not consecutive)."

I guess it will be up to the attorneys to argue whether paying the dividends late satisfies it because they did pay eventually, or whether the "whether or not consecutive" part takes precedence, since they are cumulative shares.

[I_like_preferreds]

dividends are paid as declared by the board, they are not late. They are paid or not paid. The clock just started with this unpaid dividend.

[Andres Rueda]

Initial step in preparing for the bankruptcy that everyone & his grandmother already know about.

[Kyle Reese]

Actually it’s the opposite. If you’re going to file soon, you don’t need to suspend dividends or reverse split the stocks. You just file. Everyone & his grandmother knows that, except you.

[bondsmoker]

@Kyle Reese

Negative. Filing takes a day - but preparing to file takes months. Lots of negotiation to be done still.

[Andres Rueda]

Ok, Kyle. Gotcha. You just keep loading up on those juicy CHK shares. They are cheap now. Real cheap. Buy, buy, buy. They are going to the moon.

[taketake1]

I haven’t heard anything about a govt bailout recently. That would be the real game changer IMO to get through 2020. Any thoughts on govt bailout? Cash infusion? Debt purchase? Subsidies not to drill?

[bondsmoker]

@taketake1

Trump already scored his political points via the OPEC production cuts. He's done with oil....moved on.

[taketake1]

Care to rethink?

[Refrack]

It's simple, look at where their bonds are priced. Most of their unsecureds trade at just a few pennies. If you hold this stock you are burning money. It's not even as good as a lottery ticket.

[daddiojrvs]

Truly only chance they have is too use a position of abl while its available and buy as much debt trading on pennies and eliminate much of the interest expenses and then beg feds for low interest bil or so bailout prob w warrants which is fine...or hope someone bombs Middle East and oil jumps like crazy...

[Refrack]

No, they have no chance.

[Man in Black]

Bought a very small position today for the first time. According to a recent press release, it owes about 300mn to cover debt maturities that are maturing this year and about the same amount next year. It's risky, but if it is able to sell the promised 300mn-500mn in non-core assets, it may recover. Any good news (even slightly), will trigger a massive short squeeze due to the extremely low float.

[wanttobewealthy]

They can tap their revolver

[stag15]

Or their hedges? Best hedge book in the industry at the moment.

[User 40906785]

like having the best seat on the titanic