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Gold/Mining/Energy : Chesapeake Energy CHK
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To: Gabor who wrote (487)4/8/1999 10:42:00 PM
From: Ed Ajootian  Read Replies (1) of 726
 
Excerpted from 8-K filed on 04/01 by CHESAPEAKE ENERGY CORP:
CHESAPEAKE ENERGY CORP reports important event.
ITEM 5. OTHER EVENTS
The Board of Directors of Chesapeake Energy Corporation has approved a
repurchase program of up to $10 million in the aggregate of the Company's
publicly traded Senior Notes and its 7% Convertible Preferred Stock. The
purchase of the Company's publicly traded Senior Notes may be made by the
Company from time to time in open market transactions, privately negotiated
transactions or block trades. The purchase of the Company's 7% Convertible
Preferred Stock may be made from time to time by the Company's wholly owned
subsidiary, Chesapeake Energy Marketing, Inc., in open market transactions,
privately negotiated transactions or block trades.
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I think this is a great move. Their implicit cost of capital for the preferred stock is something like 23% even with the preferred selling at $15. They are obviously not earning 23% on their money in their E&P business so they're doing the right thing to buy it back IMO.

Kinda weird that the banks will let them spend $10 mm to buy back securities but will not let them pay a dividend on these same securities.
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