Chesapeake Suspends Dividend Payments; Stock Still Falling

On Friday Chesapeake Energy announced it has suspended payment of dividends on each series of its outstanding convertible preferred stock effective immediately. The company also made the point that suspending this type of dividend does not constitute a default (failure to pay) under any of the company’s debt instruments. The suspension comes just a few days after the company completed a reverse stock split, combining 200 shares of old stock into 1 share of new stock (see Chesapeake Energy Reverse Stock Split 1-for-200). Following the stock split, the adjusted share price for the new stock continued to decline (see Chesapeake’s Reverse Stock Split Bombs, Company “On Life Support”). The downward trend continued on Friday with Chessy’s stock price sliding another 7%.

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