(Reuters) - The lender behind $500 million worth of Aubrey McClendon’s personal loans is a private equity firm with headquarters across the street from the White House and the Chinese government as a minority owner.
The firm, EIG Global Energy Partners, is run by R. Blair Thomas, an attorney and veteran energy investor. Formerly the Energy & Infrastructure Group of Trust Company of the West, EIG spun out of TCW in January 2011. It had $9.5 billion under management at the end of last year.
Those deep pockets - along with special ties to McClendon - have enabled it to bankroll his share of Chesapeake wells, according to minutes of a February 2011 meeting between EIG and the New Mexico State Investment Council, the state’s public investment fund.
At the meeting, EIG chief operating officer Randall Wade sought a $50 million investment from New Mexico. Asked about a prior EIG investment in McClendon’s well interests, Wade boasted EIG had known Chesapeake for more than 25 years and “provided pre-IPO financing for them in the late 1980s.”
Those tight bonds, Wade said, have created other unique opportunities for EIG.
“In fall 2008, Mr. McClendon didn’t have liquidity to participate in the (well) program in 2009, at which point EIG entered into discussions with him” and ultimately formed a special purpose vehicle called Larchmont Resources, Wade said.
Through Larchmont, EIG acquired the rights to all of McClendon’s well stakes for 2009 and 2010. EIG then set up a new special purpose vehicle - Jamestown Resources - to control McClendon’s well shares in 2011, with rights to 2012, Wade said.
EIG’s investments have been extremely profitable. “EIG sweeps 100 percent of the cash flow generated by those projects until EIG has gotten all of its money back plus a 13 percent realized return,” Wade told New Mexico investors. EIG also gets a 42 percent cut of McClendon’s share of the well profits “in perpetuity,” he said.
EIG declined comment.
In February, EIG announced that China Investment Corp.(CIC), China’s sovereign wealth fund, had acquired a minority stake for an undisclosed amount. CIC declined comment.
Reporting By Brian Grow and Anna Driver; editing by Blake Morrison and Michael Williams.
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