Wednesday, April 18, 2012

McClendon's Debt Back in the Spotlight

Speaking of Chesapeake Energy, the company's stock is taking a beating today with the disclosure that CEO Aubrey McClendon has borrowed up to $1.1 billion to finance his personal 2.5% working interest in all of the company's wells.  This arrangement - bizarre as it is - has been in place since 1993 and is old news, but I think the magnitude of the CEO's debt and the potential for conflicts of interest are spooking investors.

It's hard to reserve comment on the arrangement, but I will show restraint.  I will say, however, that Chesapeake is a ...complicated company, but it never disappoints when it comes to interesting news.

[Update: Here is the Reuters article that seems to have started the hubbub. Here is Chesapeake's double-barreled response.]

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