Chesapeake Screws Shareholders Again, Swaps More Debt for Equity

In yet another dilutive debt/equity swap, the beleaguered oil and gas giant is running out of creative ways to service its debt. They’ve issued 10% of its equity over the past month, in an effort to get a better handle on their 9 billion debt hold.

This, of course, comes at a great cost. Shares of CHK are down 44% over the past month.

The company, which has more than $9 billion in debt, said on Monday it issued or agreed to issue about 37.1 million shares between May 16 and May 23 in exchange for senior notes worth about $166 million. The notes are due in 2017, 2019, 2037 and 2038.

Chesapeake swapped $153 million of debt for about 4 percent of its equity earlier this month.

This is the main reason why I’d avoid playing the sector on the long side. Desperate people do desperate things.