The deal comes as Oklahoma City–based Chesapeake—the nation’s second-largest producer of natural gas behind market leader Exxon Mobil—struggles to cope with more than $13 billion in debt and an inquiry into nearly $1 billion in alleged personal loans to CEO
, a frequent face on TV screens these days thanks to his courtside perch at 18,200-seat
Chesapeake Energy Arena
during Oklahoma City Thunder home games. McClendon owns 19.2 percent of the
NBA Finals–bound franchise
As it happens, Bracewell is also advising Chesapeake on the proposed sale of its pipeline assets to GIP, a New York–based private equity firm formed in 2006 as a joint venture between Credit Suisse and General Electric.
Bloomberg reported Friday
that Wachtell, which has handled several large M&A deals for Chesapeake over the years, remains standing counsel to the company’s board of directors on corporate governance matters.
litigation partner Craig Weinstock in Houston is serving as counsel to an audit committee of Chesapeake’s board that is conducting an independent review of the alleged loans to McClendon,
according to Bloomberg
. Spokeswomen for Wachtell and Locke Lord did not immediately respond to requests for comment.
Chesapeake announced last month that it would
replace McClendon as chairman of the company and end an arrangement
that allowed him to purchase a 2.5 percent stake in every well drilled by Chesapeake. The company acknowledged in SEC filings that the regulator had begun an “informal inquiry” into whether the program could create conflicts of interest.
The company’s GIP transaction is structured so that Chesapeake will sell its entire 45 percent stake in Chesapeake Midstream Partners (CMP) for roughly $2 billion, while also divesting itself of assets in subsidiary Chesapeake Midstream Development (CMD) for another $2 billion. Chesapeake said in a statement announcing the deal that the pipeline sales would help the company raise cash and reduce expenses by $3 billion over the next three years.
Latham & Watkins
M&A partners Edward “Ted” Sonnenschein and Eli Hunt in New York are leading a cross-country team from the firm advising GIP on the deal that includes energy transactional partners Charles Carpenter and Ryan Maierson, equity finance partner Andrea Schwartzman, bank finance partner Craig Kornreich, global tax chair David Raab and tax partner C. Timothy Fenn, and employee benefits partner David Taub.
GIP’s acquisition of the Chesapeake assets is expected to close by June 29, 2012, only three days after a potential Game 7 of the NBA Finals is scheduled to be played. That game would feature McClendon’s Thunder against either the Boston Celtics or the Miami Heat.