This is from Gas Briefing Daily and I no longer have a subscription so…
Chesapeake shares tank on news of CEO’s loans
Chesapeake Energy Corp’s stock was pummeled Wednesday, hitting a new 52-week low as skittish investors sold shares in the Oklahoma City producer in the wake of news that its CEO floated $1.1bn in loans using his 2.5% interest in company wells as collateral.
I want to see shareholders upset over the sacrifice zones their investments create. But, I’ll settle for this today.
From smart person:
from the article: an unusual corporate perk that offers him a chance to invest in a 2.5 percent interest in every well the company drills. McClendon in turn is using the 2.5 percent stakes as collateral on those same loans, documents filed in five states show.from the article: Both McClendon and Chesapeake said the loans don’t pose any conflict of interest. And they are private transactions that the company has no responsibility to disclose or to vet, Chesapeake said. “There are no covenants or obligations in my loan documents or mortgages that bind Chesapeake in any way,” McClendon wrote in an email to Reuterand this: McClendon’s biggest personal lender, EIG Global Energy Partners, has also been a big financier for Chesapeake.question: this is how these guys parse words……..the loans have chesapeake wells as collateral but audrey the riskbaron doesn’t think that binds chesapeake. so when he defaults on his loans, the “biggest personal lender” becomes the owner of those 2.5 percents right?sounds to me like the lender has a conflict of interest.