Icahn Buys Stake in Chesapeake, Seeks Board Replacements

Icahn Said to Be Major Chesapeake Holder After Buying Stake
Carl Icahn, whose fortune Forbes magazine estimated at $14 billion as of March, has profited from Chesapeake in the past. Photographer: Scott Eells/Bloomberg

May 25 (Bloomberg) -- Billionaire investor Carl Icahn bought a 7.56 percent stake in Chesapeake Energy Corp 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.

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.

To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net