Chesapeake Energy Corporation in Oklahoma City, announced on Friday it has suspended payment of dividends on each series of its outstanding convertible preferred stock effective immediately.
Doug Lawler, Chesapeake's Chief Executive Officer, released the following statement,
"The board and management believe this decision is in the best long-term interest of all Company stakeholders. Today's decision to suspend our preferred stock dividends will allow the company to retain approximately $170 million of additional cash per year and use these funds to purchase debt at significant discounts in the near term. Given the current commodity price environment for oil, natural gas and natural gas liquids, we believe that redirecting this cash toward debt retirement provides better returns for the Company. We currently have senior debt securities trading at significant discounts, and we will continue to take advantage of that within the coming year."
According to officials, suspension of the dividend does not constitute an event of default under the Company's revolving credit facility or outstanding bond indentures.