Chesapeake in talks to sell pipeline biz: source
NEW YORK (Reuters) - Chesapeake Energy (CHK.N: Quote) is in late-stage talks to sell nearly all of its pipeline assets for over $4 billion to Global Infrastructure Partners (GIP), according to a person familiar with the matter, as the company scrambles to close a $9 billion to $10 billion funding shortfall.
Infrastructure investment fund GIP is already a partner with Chesapeake in its pipeline company Chesapeake Midstream Partners LP CHKM.N, as well as that firm's general partner.
Under the deal being discussed, GIP would buy out Chesapeake's stake in the midstream company and its general partner, as well as other pipeline assets, said the person, who spoke on the condition of anonymity.
Chesapeake, the second-largest U.S. natural gas producer, is under pressure to sell assets and cut spending to reduce debt after tumbling natural gas prices have pinched profits.
The company's corporate governance has also come under intense scrutiny since Reuters reported in April that Chief Executive Aubrey McClendon had taken out more than $1 billion in loans, using his personal stakes in thousands of company wells as collateral.
McClendon has since agreed to relinquish his role as chairman, and the company has said it will replace four of its board members with directors chosen by its largest shareholders.
Chesapeake and GIP declined to comment.
Bloomberg originally reported news of the talks on Tuesday. According to that report, a deal could be announced within days.
The company's annual meeting is scheduled for Friday, June 8. Continued...