As if a savior finally revealing himself to his people Carl Icahn has walked into Chesapeake Energy Corporation (NYSE:CHK) and instantly changed the fortunes of the ccompany’s investors. The financial maven disclosed last Friday evening that he was holding a 7.6% stake in the company.
He also gave indications that he would be taking an activist role in the firm and asked that 4 new directors be appointed to the firm’s board including himself. The 7.6% holding makes him the company’s third largest shareholder.
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The firm’s shares were already up late last week just on the rumor that Icahn had invested and the actuality that BlackRock Inc. (NYSE:BLK) had quintupled its stake in the oil and gas firm.
Chesapeake’s recent problems regarding cash flow, its debt and corporate governance have been really troubling and many investors have been getting out for some time. One of the most prominent investors to leave the company was T Boone Pickens who disclosed last week that he had no more interest in the company.
With a low price and the chance to get involved in the firm with a shake up in the board happening in June Icahn saw his chance to invest and turn the firm around. The company is currently undergoing the strategic sale of about $10 billion in assets this year in order to make up for stunted cash flow and mounting debt.
It now looks like those asset sales have been going well though the company is seeking to delay some sales to allow it to keep up with some debt obligations. Oil India told Reuters that it is interested in one of the firm’s assets the Mississippi Lime Formation.
Chesapeake has plans to bring in a Joint venture partner on the field and the State Run Indian company may fit the bill. The popularity of Chesapeake’s assets, given the problems in the Natural Gas sector at the moment is surprising.
Chesapeake’s stock was up almost 1.5% at time of writing as investors remain buoyant on hopes that Icahn can turn the company around. Whether or not their confidence in the experienced activist has been well placed will come to light soon.
The firm’s annual meeting which will decide the appointment of directors will take place on June 8. Shareholders will decide whether as a whole they are going to give full support to Icahn in his plans to transform the company.