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alang3

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  • Chesapeake's $4 Billion Pipeline Sale A Strong Start On The Road To Recovery [View article]
    How is selling off your future cash flows in return for the discounted net present value of those cash flows today "helping" or "improving" CHK or a "strong start to the road to recovery"?

    As an analogy, CHK is like a deadbeat dad owing massive amounts of child support (let's call them joint venture and VPP accounts payable). However, this deadbeat dad has to pay these child support payments in natural resources instead of US currency. So, if you look at his books, it seems like he's solvent, right? The only thing is, all the income he works to may (he spends money and time making), is going to be garnished and used to pay off his child support.

    So, at the end of the day, he's left with just a fraction of that income to sustain himself. What is his plan for a "strong start to the road to recovery"? Why, incur more child support in exchange for paying off some of his credit card debt! (Exchange his future income for cash used to pay off his non-off-book liabilities).

    That's merely delaying the inevitable and just a shareholder and media stunt. The company is a SELL SELL SELL, and when the lead plaintiff deadline on 6/25/12 comes, we're really going to find out what all the top securities litigation firms in the country have to say about what both the CEO and every other exec. at CHK did to the company (at the expense of the shareholders).
    Jun 7 10:01 AM | 2 Likes Like |Link to Comment
  • Chesapeake Energy (CHK) is in advanced discussions to sell its 45.2% limited partner interest in Chesapeake Midstream (CHKM) and other pipeline assets to Global Infrastructure for over $4B. The deal would be part of Chesapeake's strategy to sell assets as it faces a cash-flow shortfall that Alembic analyst James Sullivan believes could hit $22B by the end of 2013.  [View news story]
    I'm not sure why the market is reacting so positively to this news. The same exact CEO that is creating headline risk (and actual legal liability) for CHK is still the CEO. Nothing has changed but 4 useless Board Members being replaced by 4 useless Board Members. Further, how are more AMTs (asset monetization transactions) going to "fix" CHK's liquidity problems? CHK is just "deferring" its liquidity problems, because a sale of an asset for its NPV means CHK will never realize the asset's FV (expected to greatly appreciate as an energy commodity). An M&A deal is out of the picture, so what do CHK shareholders have left but a ticking time-bomb of a liquidity crisis waiting to happen?
    Jun 6 10:24 AM | Likes Like |Link to Comment
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