Apologies to the Grateful Dead for mixing them up in this mess.
It was probably the intervention thang.*
Some years ago I was trying to determine if it was possible to save a private company that had raised money under regs 504 through 6. While out looking for ideas I came across one of the grossest human beings I've ever met, always talking about his anal fissures when he wasn't trying to screw everyone he met.
His idea was to loan the company some money and take the intellectual property when it couldn't meet the terms, all while promising the passive investors that he was "providing a lifeboat".
First he'd save the IP and then he'd come back for them.
I'm reminded of this when thinking about deal guys coming to rescue shareholders.
Somehow the deal guy always gets prime seat in the lifeboat while the other shareholders may or may not do as well.
Today the stock closed up another 2.91% at 17 bucks even.
Here's today's story, from Bloomberg:
Icahn’s Chesapeake Intervention Faces $22 Billion Hurdle
*Via the UC Santa Cruz's Annotated Grateful Dead Lyrics:Carl Icahn’s makeover of Chesapeake Energy Corp. (CHK) (CHK)’s board may be too late to shield the U.S. natural- gas producer from a gathering storm of wrong-way bets on energy demand, plunging oil prices and corporate-governance failures.Chairman and Chief Executive Officer Aubrey McClendon’s management of the company he co-founded 23 years ago will come under new oversight after Chesapeake said yesterday it will replace four of the eight non-executive directors along with naming a new independent chairman. Icahn said he’ll now push to curb spending after earlier criticizing the CEO and directors for “irresponsible actions” that led Chesapeake “to the edge of the proverbial cliff.”
The overhaul of Chesapeake’s board follows a plunge in gas prices to a 10-year low and revelations that McClendon had intertwined his personal business with that of the company’s key financiers. The CEO’s strategic shift from gas toward more profitable oil production may falter after crude prices had their biggest monthly decline since 2008.
Bringing in new directors doesn’t address “concern on cash flow in 2013, especially after you had a $24-a-barrel pullback in crude prices,” Tim Rezvan, a New York-based analyst for Sterne Agee & Leach Inc. who rates the shares “neutral,” said yesterday in a telephone interview. “That’s the latest bomb to drop: First you had gas prices, then the personal conflict-of- interest story and now you’ve got a 25 percent pullback” in crude prices since March 1.
Chesapeake lost almost half its market value in the past year as a glut of North American gas collapsed prices to the lowest since 2002 and McClendon’s personal finances came under scrutiny by the U.S. Securities & Exchange Commission, the Internal Revenue Service and the board he has led since the company’s inception....MORE
...Yeah, Neal was a great speed freak (better watch your speed) and lady in red is a barbituate (you'd be better off dead). And all notions "just crossed my mind"; Neal was famous for saying "It just occurred to me...". As the driver of The Bus, "Driving that train, high on cocaine..". Casey is Cassady. Anyway, that is the conventional wisdom on that song. I could be wrong......