Chesapeake Energy 1999 Annual Report Download - page 78

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15. Subsequent Events
In January and February 2000, the Company engaged in five separate transactions with two institutional investors
in which the Company exchanged a total of 8.8 million shares of common stock (both newly issued and treasury
shares) for 625,000 shares of its issued and outstanding preferred stock with a liquidation value of $3 1.3 million plus
dividends in arrears of $2.9 million. All preferred shares acquired in these transactions were cancelled and retired
and will have the status of authorized but unissued shares of undesignated preferred stock.
In connection with a potential restructuring of Gothic Energy Corporation ('Gothic'), Chesapeake and Gothic
agreed in March 2000 to substantially revise their joint venture originally entered into in March 1998. In addition,
Chesapeake granted Gothic an option to redeem the preferred and common shares of Gothic held by Chesapeake in
exchange for rights to certain undeveloped leasehold interests covered by the joint venture agreement. The terms of
the agreement are subject to certain conditions, including the approval by certain of Gothic's creditors. Significant
terms of the proposed agreement are as follows:
the joint venture is extended for three years to April 30, 2006,
Chesapeake is granted a right of first refusal on any property disposition by Gothic,
Chesapeake becomes operator of 28 wells currently operatedby Gothic,
Chesapeake will have the first right to drill, complete and operate wells in certain areas covered by the joint
venture,
Chesapeake granted Gothic the option to redeem its investment in $50 million liquidation amount of Gothic
Series B preferred stock, including dividends in arrears, and 2.4 million shares of Gothic common stock, for
a permanent assignment to Chesapeake of certain undeveloped leasehold interests that were originally
subject to a reassignment obligation to Gothic.
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