Replies to This Discussion

Permalink Reply by Dark Sonnet on May 25, 2012 at 2:13pm

Some additional clarity on the letter:

"Billionaire investor Carl Icahn bought a 7.56 percent stake in Chesapeake Energy Corp (CHK) as the second-largest U.S. natural-gas producer’s stock price plunged amid shareholder concern about Chief Executive Officer Aubrey McClendon’s personal financial affairs.

Four of Chesapeake’s nine directors should be replaced, Icahn said today in a letter to the Oklahoma City-based company’s board included in a U.S. Securities & Exchange Commission filing.

Carl Icahn, whose fortune Forbes magazine estimated at $14 billion as of March, has profited from Chesapeake in the past.

Chesapeake lost more than one-fourth of its market value this year as the impact of plummeting gas prices was compounded by revelations that McClendon used personal stakes in the company’s wells to obtain more than $800 million in private loans.

“Rather than act as a source of stability and provide assurance to shareholders, this board has led the company through a highly publicized spate of corporate governance breakdowns while amassing an astounding $16 billion funding gap, which we believe has contributed to the share price decline of over 55% from the 52-week high,” Icahn wrote in today’s letter.""

I hope it will be good for Ohio land owners after all of this shakes out.  Chesapeake is far from an ideal partner in o/g.

• ▶ Reply

Permalink Reply by Bluflame on May 26, 2012 at 3:23am

Fang & Dark,

   Carl Icahn is in this deal strictly for Carl. If anyone else benefits, it will likely be other stockholders. The battle lines are being drawn. CHK's response to Icahn's demands for board representation for him and Southeastern Partners (CHK's biggest shareholder) was that no action will be taken until the new non-executive chairman is appointed. That is a cop-out which will infuriate Icahn (and should).

   Mr. McClendon rolled out the welcome mat for Icahn, calling him a friend. Even called to thank him after his previous brief ownership period. In my opinion, reading between the lines of Icahn's letter to the board, Icahn believes that Mr. McClendon and the the Board merely gave him lip service during his last time around as an investor. The ink was barely dry on Icahn's previous stock sale papers when Mr. McClendon, rubber-stamped by the board, reverted back to his undisciplined wildcatter's ways resulting in the current mess.

   Stay tuned for further action. We've merely seen the opening skirmish. Adding gasoline to the fire, Mr. McClendon was doing his hedge-fund thing during Icahn's previous ownership, which very likely wasn't disclosed to Icahn. I can hear the discussion: "But Carl, it REALLY wasn't a conflict of interest."

  In closing, please refer to my opening sentence.

BluFlame

• ▶ Reply

Permalink Reply by Dark Sonnet on May 26, 2012 at 2:14pm

I agree with your opening sentence and also that any other benefits will be collateral to other stockholders and that the company will probably emerge being more sound.

Icahn will probably squeeze a little harder this time around and it will be interesting to see who is upping their stakes to follow him.  (BlackRock for one)

Yes, certainly much more to come.  Pass the popcorn...

• ▶ Reply