Oklahoma City-based Chesapeake Energy Corporation has set an expected effective day for its planned reverse stock split.
A special meeting of shareholders will be held April 13 and the reverse stock split will need their approval before it can go into effect.
The reverse stock split proposal includes a proposed reverse stock split ratio within a range between and including one-for-fifty (1:50) and one-for-two-hundred (1:200). If shareholder approval is obtained, the final ratio will be determined by the Company’s Board of Directors.
If approved, the reverse stock split is expected to become effective at 5:00 p.m., Central Time, on April 14, 2020, and the shares will begin trading on the split-adjusted basis on The New York Stock Exchange under the Company’s existing trading symbol “CHK” on April 15, 2020. The reverse stock split is intended to, among other things, increase the per share trading price of the Company’s common shares to satisfy the exchange’s $1.00 minimum bid price requirement for continued listing on the NYSE.
As a result of the reverse stock split, every 50 to 200 (as determined by the Company’s Board of Directors) shares of the Company’s common stock will automatically combine into one share, and the number of shares of common stock outstanding will be reduced. If approved, the Company’s total number of authorized shares of common stock will be reduced as determined by a formula based on two-thirds of the applicable reverse stock split ratio.
However, since the reduction of authorized shares of common stock will be implemented using a smaller ratio than the reverse stock split, the aggregate effect of the reverse stock split and authorized shares reduction will be to increase proportionately the number of authorized shares of the Company’s common stock. The authorized shares reduction will not have any effect on the rights of existing shareholders, and the par value of the common stock will remain unchanged at $0.01 per share.
No fractional shares of common stock will be issued as a result of any reverse stock split. Instead, in lieu of any fractional shares to which a shareholder of record would otherwise be entitled as a result of the reverse stock split, the Company will pay cash (without interest) equal to such fraction multiplied by the average of the closing sales prices of the Company’s common stock during regular trading hours for the five consecutive trading days immediately preceding the reverse stock split’s effective date (with such average closing sales prices being adjusted to give effect to the reverse stock split).
Source: Chesapeake Energy