Wednesday, May 12, 2010

Chesapeake Sells More Preferred Stock

Chesapeake Energy sold another $600 million of convertible preferred stock to North American institutional investors today. Called a PIPE, or a private investment in public equity, the security pays a 5.75% dividend and is convertible into common stock at $27.94, approximately a 20% premium to where CHK closed yesterday.  The proceeds will be used to pay down debt.

The security is similar to the one sold to the Asian investors earlier this week.  This transaction means that Chesapeake has raised $1.2 billion with the potential for another $500 million if the Asian investors exercise their rights to buy more.

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