Chesapeake Announces Sale of Midstream Assets for Over $4B Before Shareholder Meeting

Chesapeake Energy

announced on Friday that it plans to sell $4 billion dollars worth of assets in its energy pipeline and infrastructure business. Carl Icahn, after taking a large stake in the company, has managed to push for significant changes. Chesapeake has agreed to replace four directors and is now planning to sell its midstream assets in three transaction for total expected cash proceeds of more than $4 billion dollars. In the same announcement, Chespapeake's midstream partner, Global Infrastructure Partners has agreed to acquire all of Chesapeake Energy's ownership in Chesapeake Midstream Partners

for $2 billion. Adebayo Ogunlesi, GIP's Managing Partner, commented, "We have enjoyed a mutually beneficial partnership with Chesapeake over the past three years, and we look forward to continuing to provide Chesapeake with high quality midstream services while expanding these offerings to other producers requiring similar services. The management team and employees at CHKM have proven to be very capable and highly customer focused, and we are confident this business will continue to be successful and grow profitably in the years ahead." On May 25th, Carl Icahn acquired 7.6% of Chesapeake Energy, and now is making major changes to the second largest producer of natural gas. After an ongoing crises with the governance, Carl Icahn is pushing for change. Carl Icahn commented on the situation, "We appreciate the Board's willingness to listen to shareholders and to respond appropriately. Under Aubrey's leadership, Chesapeake has assembled great assets and I am confident I can help the Company create significant shareholder value from these assets. We enjoyed a very good relationship when I acquired almost 6% of the Company's stock in late 2010 and I look forward to a similarly constructive relationship now." These steps to erase CEO Aubrey McClendon's use of his interest as collateral for $1.1 billion loan made by a firm, may have had an effect on the stock price, which has traded up about 8% since Monday, but the stock is still down about 40% for the year. While the steps taken Monday may have created a bullish scenario for Chesapeake, the company still faces many funding, debt, and cash flow problems. McCllendon is to stay as CEO until June 22, when new chariman selection will be made. CNBC reported earlier that two directors up for re-election, Richard Davidson and Burns Hargis, may not be re-elected.