Chesapeake Energy has adopted a poison pill shareholder rights plan to protect the company from any takeover attempts due to its low stock prices, Kallanish Energy reports.
Last Thursday, the Oklahoma-based O&G company adopted what is called a purchasing dividend for shareholders or a shareholder rights plan.
The shareholder rights can be exercised if a person or group acquires 4.9% of Chesapeake’s outstanding common stock, the company said in a statement.
Under those conditions, holders of the rights can buy common shares at a 50% discount or Chesapeake can exchange each right for one share.
The shareholder rights plan is designed to protect the company’s tax-related assets known as “net operating loss carry overs,” the company said.
At year-end 2019, the company had $7.6 billion worth of so-called carry forward debt available to offset future federal taxable income.
The struggling company said it would lose its ability to use the NOLs under federal tax rules if ownership changed.
Earlier this month, stockholders approved a reverse stock split in an attempt to boost company stock prices.
At year-end 2019, the company had about $9 billion in debt.
