Chesapeake Energy Corp. has adopted a shareholder rights plan, otherwise known as a poison pill, to protect against a hostile takeover as the oil rout and pandemic have clouded operations at a time when the producer was already grappling with a mountain of debt.

The plan can be exercised if an individual or entity acquires at least a 4.9% share of the outstanding stock. In that case, Chesapeake would swallow the so-called poison pill by triggering the plan allowing holders of the rights to purchase common shares at a 50% discount. Chesapeake also could exchange each right for one share. Such a move would dilute the interest of any party seeking a hostile takeover.

The plan would expire next year, one day after certifying voting results at the annual meeting, unless shareholders ratify the rights plan before then, in which case it would continue in effect until April 22, 2023.

The plan would protect the net operating loss carry forwards, or NOLs, Chesapeake said. At the end of 2019, it had federal NOLs of $7.6 billion available to offset future federal taxable income.

Chesapeake won shareholder approval for a reverse stock split earlier this month to regain compliance with a New York Stock Exchange delisting notice. The split was one in a series of moves it has executed since last year to better manage financial woes. While it retracted a warning issued last November that it could ultimately file for bankruptcy, the company still has $9 billion of debt, some of which is set to mature this year.