Carl Icahn is Once Again a Chesapeake Investor

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

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Billionaire activist investor Carl Icahn

Billionaire investor Carl Icahn now has a 7.56 percent stake in Chesapeake Energy, according to paperwork just filed with the Securities and Exchange Commission.

Icahn’s buy-in has been expected for weeks. The besieged Oklahoma City natural gas giant’s stock has ticked up about 10 percent this week on rumors of the activist investor’s interest.

Shares of Chesapeake soared the last time Icahn invested in the company, a 5.8 percent stake in December 2010. Icahn started unloading in March 2011 when the company’s stock was trading for about $38, the Wall Street Journal‘s Liam Denning reports.

Barring a sale, it is possible Mr. Icahn could push Chesapeake to fix its governance and leverage issues more aggressively. But those have been pushed publicly already by shareholders and analysts. Adding Mr. Icahn’s name might inject an extra frisson of excitement, but such thrills can prove fleeting.

Icahn’s buy-in comes with a call to immediately dismiss at least four board members. In a letter, Icahn said he and CEO Aubrey McClendon had dinner and discussed ways to fill the company’s “credibility gap.”

Icahn writes:

“To engender any meaningful credibility among shareholders, corporate governance reforms cannot, in our view, be led by directors whose irresponsible actions have brought this company to the edge of the proverbial cliff …

… In our opinion, only when these changes are effectuated will the board be truly independent and more importantly will investors come to believe that promises made will be promises kept; when a capital plan is agreed upon it will be maintained, not diverged from as it has in the past.”