May 24, 2012 / 9:34 PM / 8 years ago

BlackRock group raises Chesapeake stake: source

(Reuters) - BlackRock Inc’s (BLK.N) Global Resources team increased its Chesapeake Energy Corp (CHK.N) stake to 4 million shares from fewer than 1 million shares, a source familiar with the situation said on Thursday.

While the group raised its exposure, executives within the team said Chesapeake’s management issues are still a “distraction,” the source said.

Last month, Reuters reported that Chesapeake Chief Executive Aubrey McClendon had pledged his interests in many Chesapeake wells as collateral for more than $1.1 billion of personal loans.

That prompted conflict-of-interest concerns among investors, who feared that McClendon might have obtained more favorable loan terms in exchange for allowing his lenders to do other business with the Oklahoma City, Oklahoma-based company.

Shares have been under selling pressure since, hitting a year low of 13.32 on May 17. Shares ended Thursday up 3.25 percent at $15.58.

BlackRock’s Global Resources team oversees more than $5 billion in assets, as of March 30.

A BlackRock representative declined to comment.

In response to the corporate governance issues, Chesapeake said that McClendon would give up his role as chairman, while retaining the chief executive’s job. It also said it will end the program allowing McClendon to invest in its wells in June 2014, or 18 months earlier than originally planned.

Blackrock Inc had assets under management of more than $3.5 trillion at the end of 2011.

It was not clear how much of Chesapeake Blackrock Inc owns, but in the first quarter, BlackRock Institutional Trust Co bought a net 350,000 shares of Chesapeake, boosting its ownership to 23.2 million shares, or 3.5 percent, at the end of the quarter, according to Thomson Reuters data.

Reporting By Jessica Toonkel; Editing by Tim Dobbyn and Carol Bishopric

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