Icahn nominee resigns from Chesapeake board; shares tumble

Tue Sep 27, 2016 1:25pm EDT
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By Arathy S Nair

(Reuters) - Chesapeake Energy Corp (CHK.N: Quote) said on Tuesday that two directors, including a representative of activist investor Carl Icahn, resigned on Monday, a week after Icahn more than halved his stake in the natural gas producer.

Chesapeake said the resignations of Icahn representative Vincent Intrieri, along with John Lipinski, board members since June 2012 and June 2014 respectively, were not due to any disagreements. (bit.ly/2cSkDJK)

However, the No. 2 U.S. natural gas producer did not specify why the two had stepped down. Chesapeake, Icahn, Intrieri and Lipinski were not immediately available for comment.

Icahn said last week that Chesapeake's management had done "an admirable job" over the last few years and that he had reduced his stake in the company – by 51.6 percent to 4.55 percent – for tax-planning purposes. (bit.ly/2cSkpT7)

Chesapeake shares were down 9 percent at $6.02 in early afternoon trading, amid a broader decline by energy company stocks due to a sharp drop in crude oil prices.

Investors could be thinking that the resignations indicate that Icahn believes the stock cannot rise further or that he had a disagreement with the company, said James Sullivan, an analyst with Alembic Global Advisors.

"But he is out of it and ... people pile in when he piles in, people pile out when he piles out," Sullivan said.

Up to Monday's close, Chesapeake's stock had dropped 55 percent since May 2012, when Icahn revealed a stake in the company and campaigned to replace at least four directors. The stock had lost 2.8 percent since he cut his stake last week, but had gained about 47 percent since the start of the year.   Continued...

Chesapeake Energy Corporation's 50 acre campus is seen in Oklahoma City, Oklahoma, on April 17, 2012.   REUTERS/Steve Sisney