NEW YORK/LONDON (Reuters) - Pressure on Chesapeake Energy’s embattled chief executive increased on Monday as a small London hedge fund urged the company’s board to terminate Aubrey McClendon, while a well-known activist investor was reported to be building a position in the company.
London-based Noster Capital sent an open letter to Chesapeake’s board on Monday asking the No. 2 U.S. natural gas producer to remove McClendon as details of his financial dealings emerge.
Chesapeake has been caught in a corporate governance controversy since Reuters reported last month that McClendon had mortgaged his personal stakes in the company’s oil and gas wells to companies that had lent money to the company.
In Noster’s letter the fund, which owns 250,000 Chesapeake shares, asks the board to “immediately terminate” McClendon and keep him on as an unpaid consultant.
Pedro Noronha, managing partner at Noster, said in a telephone interview that he hopes his letter will prompt other shareholders to take a more critical look and speak up as well.
He added that he is keeping his position unchanged for now.
The Wall Street Journal reported on Sunday that billionaire investor Carl Icahn, one of Wall Street’s most powerful activist investors, is buying Chesapeake shares.
Icahn was not immediately available for comment. Chesapeake would not confirm the report about Icahn.
The company said on Monday it was confident it would complete assets sales to plug a funding gap estimated at $10 billion this year.
Chesapeake shares were up 9.1 percent at $16.16 on Monday morning on the New York Stock Exchange.
Reporting by Laurence Fletcher in London and Svea Herbst-Bayliss in New York; editing by Matthew Lewis