Chesapeake Energy 2000 Annual Report Download - page 60

On May 25, 1995, we issued $90 million principal amount of 10.5% Senior Notes due 2002. In April 1998, we
purchased all of our 10.5% Senior Notes for approximately $99 million The early retirement of these notes resulted
in an extraordinary charge of $13.3 million.
Chesapeake is a holding company and owns no operating assets and has no significant operations independent
of its subsidiaries. Our obligations under the 9.625% Senior Notes, the 9.125% Senior Notes, the 7.875% Senior
Notes and the 8.5% Senior Notes have been fully and unconditionally guaranteed, on a joint and several basis, by
each of our "Restricted Subsidiaries" (as defined in the respective indentures governing the Senior Notes). Each
guarantor subsidiary is a direct or indirect wholly-owned subsidiary.
The senior note indentures contain certain covenants, including covenants limiting us and the guarantor
subsidiaries with respect to asset sales; restricted payments; the iiicurrence of additional indebtedness and the
issuance of preferred stoclç liens; sale and leaseback transactions; lines of business; dividend and other payment
restrictions affecting guarantor subsidiaries; mergers or consolidations; and transactions with affiliates. We are
obligated to repurchase the 9.625% and 9.125% Senior Notes in the event of a change of control or certain asset
sales.
The senior note indentures also limit our ability to make restricted payments (as defined), including the
payment of cash dividends, unless certain tests are met. From December 31, 1998 through March 31, 2000, we were
unable to meet the requirements to incur additional unsecured indebtedness, and consequently were restricted from
paying cash dividends on our 7% cumulative convertible preferred stock. As a result of our failure to pay dividends
for six quarterly periods, the holders of preferred stock were entitled to elect two new directors to the Chesapeake
board after May 1, 2000. On September 22, 2000, we declared a regular quarterly dividend and a special dividend
equal to all unpaid dividends on our preferred stock, both payable November 1, 2000 to shareholders of record on
October 16, 2000. A total combined dividend of $7.444 per outstanding preferred share was paid November 1, 2000,
eliminating the right of preferred stockholders to elect directors.
Set forth below are condensed consolidating financial statements of the guarantor subsidiaries and
Chesapeake's subsidiaries which are not guarantors of the Senior Notes. Chesapeake EnergyMarketing, Inc. was a
non-guarantor subsidiary for all periods presented. All of our other subsidiaries were guarantor subsidiaries during
all periods presented.
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