Summary
Chesapeake Energy Corporation (CHK) announced on February 28, 2003, the pricing of a private offering of 4.0 million shares of 6.00% cumulative convertible preferred stock at $50 per share, totaling $200 million. The offering is expected to close on March 5, 2003. These preferred shares will pay a $3.00 annual dividend, payable quarterly, and are convertible into 4.8605 shares of Chesapeake common stock at an initial conversion price of $10.29 per share. The company has also granted the initial purchasers an option to buy an additional 600,000 shares. The primary use of the net proceeds is to fund pending acquisitions of Mid-Continent natural gas properties from El Paso Corporation and Vintage Petroleum, Inc., with any remaining funds or in the event of acquisition failure, to be used for general corporate purposes, including other potential acquisitions and repayment of amounts outstanding under its revolving bank credit facility. The preferred stock and underlying common stock are not registered under the Securities Act of 1933 and are eligible for trading under Rule 144A, with purchasers receiving registration rights.
Key Highlights
- 1Chesapeake Energy priced a private offering of 4.0 million shares of 6.00% cumulative convertible preferred stock at $50 per share.
- 2The offering is expected to generate approximately $200 million in gross proceeds.
- 3Each preferred share carries an annual dividend of $3.00, payable quarterly.
- 4The preferred stock is convertible into 4.8605 shares of Chesapeake common stock at an initial conversion price of $10.29 per share.
- 5Proceeds will be used to finance pending acquisitions of natural gas properties and repay debt.
- 6The offering is a private placement and not registered under the Securities Act of 1933, eligible for trading under Rule 144A.
- 7The company has granted an option for an additional 600,000 shares of preferred stock.