Chesapeake Energy Shareholders: Meet Your Would-Be Savior
NEW YORK (TheStreet) -- Chesapeake Energy's(CHK) largest shareholder is turning into an activist. The move by Southeastern Asset Management, Chesapeake's top shareholder, signals that even after the company said it would split the chairman and CEO roles and agreed on early termination of a controversial oil & gas well ownership program for its co-founder and CEO Aubrey McClendon, investors may push for bigger changes to overcome a balance sheet in crisis and a 2012 low in shareh prices.
On Wednesday, Southeastern, with an over-13% stake in Chesapeake, changed its status to an activist investor so that it can work with the struggling gas giant's management to boost shares. In a filing with the Securities and Exchange Commission, Memphis, TN-based Southeastern said that it would work with management and outside parties on "possible courses of action to assist in building corporate intrinsic value per share or to cause the company's true economic value to be recognized."
|Chesapeake's biggest investor becomes an activist|
The move comes amid new revelations about McClendon's potential conflicts of interest related to his stewardship of the second biggest U.S. oil and gas driller after ExxonMobil (XOM) . A Reuters investigation on Wednesday reported that McClendon had run a $200 million commodities trading hedge fund that may conflict with his role at a leading oil and gas exploration and production company. Last week Reuters published an investigation of McClendon's personal loans using his stake in Chesapeake wells as collateral.
Southeastern's activist filing also comes a day after its CEO was quoted in a Chesapeake Energy press release about the search for an independent chairman. Mason Hawkins, Southeastern Asset Management CEO, stated in the release, "We are pleased that the Board has listened to our input and believe it has made the right decision by ending the FWPP early and seeking an independent Chairman. Aubrey was right to recognize that these actions are in the best interests of the Company and its shareholders. We support management's continuing efforts to unlock and deliver the value embedded in Chesapeake's assets."