SEC starts probe of Chesapeake CEO’s well stakes

 

 

(Reuters) – The Securities and Exchange Commission has opened an informal inquiry into Chesapeake Energy Corp’s controversial program that granted Chief Executive Aubrey McClendon a share in each of the natural gas producer’s wells, a source familiar with the matter said on Thursday.

That investigation, being led by the SEC’s office in Fort Worth, Texas, comes after Reuters reported about loans McClendon had obtained on those wells that raised concerns about a potential conflict of interest by the company’s CEO.Chesapeake said in a statement earlier on Thursday that its directors had never reviewed or approved McClendon’s mortgages on stakes in those wells, reversing its assertions that its board of directors was “fully aware” of McClendon’s financing transactions around the well ownership stakes.

 

“The Board of Directors did not review, approve or have knowledge of the specific transactions engaged in by Mr. McClendon or the terms of those transactions,” the company said.Reuters reported on April 18 that McClendon, who founded the company, had borrowed as much as $1.1 billion against his 2.5 percent interest in wells that he received under the company’s “Founder Well Participation Program.”

 

The company also said on Thursday that it would end that program in 2015, when the shareholder approval of the program that started in 2005 expires.

 

Chesapeake said “the statement last week the that ‘the Board of Directors is fully aware of the existence of Mr. McClendon’s financing transactions’ was intended to convey the fact that the Board of Directors is generally aware” that McClendon had used the well ownership stakes as security for the loans.

 

One analyst said Chesapeake’s new statement did not provide any reassurance that it was addressing the issues.

 

“How can this make me more comfortable?” said Phil Weiss, an analyst with Argus Research. “Either you’re fully aware, or you’re not. ‘Fully’ and ‘generally’ are two entirely different words.”

 

But an investor said the move was a step in the right direction, and that it showed the company was listening to shareholders’ complaints.

 

“It’s basic due diligence that sadly wasn’t being done before,” said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma, which owns Chesapeake shares. “It shows the free reign that McClendon had.”

 

The company, the second-largest natural gas producer in the United States behind Exxon Mobil Corp, said it would not extend that program for McClendon beyond 2015, when authorization under a 2005 shareholder vote will expire.

 

Chesapeake said McClendon would disclose additional information about his ownership stakes in the wells, and the board would review the CEO’s financing arrangements.

 

The loans, taken out over the past three years, were previously undisclosed to shareholders, analysts and academics said, raising concerns that McClendon’s personal financial deals could compromise his fiduciary duty to Chesapeake.

Shell CFO: Wet gas switch will drop 2012 US production

 

(Reuters) – Royal Dutch Shell Plc (RDSa.L) Chief Financial Officer Simon Henry said on Thursday that in the U.S., the company would be switching the bulk of its drilling program toward the production of “wet” natural gas and away from “dry” natural gas.

As a result of this shift in focus in its U.S. natural gas business, Shell’s natural gas production is expected to be lower year-on-year in 2012, but will be higher in 2013, he said during the Hcompany’s first-quarter 2012 earnings call with analysts.                                                 

With the emphasis on wet gas production, Shell will be able to realize higher margins on gas processing, where it can strip out higher-valued natural gas liquids, such as ethane, propane and . 

(Reporting by Jeffrey Kerr; Editing by Gerald E. McCormick)

Home prices seeing some signs of stability

 

(Reuters) – The housing market is seeing hints of stabilization, with February home prices rising for the first time in 10 months, according to a survey on Tuesday, while a measure of consumer confidence last month fell more than expected.

The S&P/Case-Shiller composite index of 20 metropolitan areas gained 0.2 percent in February from January on a seasonally adjusted basis, matching economists’ forecasts.

It was the first time prices have risen since April 2011. That gain was itself an anomaly in a string of declines stretching back to May 2010.

Still, the report was far from suggesting that problems in the battered sector were over. Average home prices across the country were back to late 2002 levels, the report said, as the non-seasonally adjusted 20-city index fell 0.8 percent to 134.20, the lowest since October 2002.

“Even with today’s data, the broad prospect for home prices is at best flat over the course of the year,” said Tom Porcelli, chief economist at RBC Capital Markets in New York.

“And as much as we have had progress with the supply and demand imbalance, it is still a challenge to gather any momentum here.”

Robert Shiller, co-creator of the home price index, said the housing market is likely to remain weak and may take a generation or more to rebound.

“I worry that we might not see a really major turnaround in our lifetimes,” Shiller said on Reuters Insider, calling the day’s home price data a mixed bag.

Data from the Conference Board showed its index of consumer attitudes edged down to 69.2 from a downwardly revised 69.5 in March.

Expectations for prices in the coming year cooled to 5.8 percent from 6.2 percent. March’s inflation expectation was originally reported as 6.3, the highest level since May 2010.

Wall Street saw little reaction immediately after the data with stocks getting a boost in the late morning from corporate earnings.

Earnings results from a round of large manufacturers on Tuesday topped Wall Street’s expectations, as recovering domestic demand helped offset a weak European economy and slowing growth inChina.

A separate, government report showed new single-family home sales sagged in March to their lowest level in four months, but sales in the prior three months were revised higher.

The Commerce Department said March sales slipped 7.1 percent to a seasonally adjusted 328,000-unit annual rate. February’s sales pace was revised higher to 353,000 units, the fastest pace since November 2009, from the previously reported 313,000 units.

“The conditions in housing are still extremely weak, but there are some very subtle, less negative, signs suggesting stabilization there,” said Sean Incremona, economist at 4Cast Ltd in New York.

Six years after home prices started to crumble, the housing market remains a thorn in the side of the economy. Ongoing foreclosures, tight credit and a dearth of buyers have kept the sector on the ropes.

Economists say a meaningful recovery in housing is still a long way off and will show a regional disparity as some areas improve more quickly than others.

The beleaguered housing market has also been a concern for the Federal Reserve. The central bank begins its two-day meeting on Tuesday, and investors will be keen for any insight on whether the central bank will provide more stimulus for the economy.

The Fed releases its statement on Wednesday. It has held interest rates at near-zero since late 2008 and has purchased more than $2 trillion in long-term securities as part of its efforts to bolster the fragile economic recovery.

The central bank has said it will likely keep rates at ultra-low levels at least through 2014.

ATLANTA, LAS VEGAS PRICES TUMBLE

Prices in the S&P/Case-Shiller 20-city index fell 3.5 percent year over year, moderating from the previous month’s decline of 3.8 percent.

Prices dropped in seven of the cities on a seasonally adjusted basis, while prices in two cities were unchanged. On an unadjusted basis, 16 of the areas slumped further.

By Leah Schnurr


Wall Street slides at open, Wal-Mart drops

 

(Reuters) – Stocks opened sharply lower on Monday on weak European data and renewed anxiety over how the region would tackle its debt crisis, while Wal-Mart slumped after a report it stymied a probe into bribery allegations.

The Dow Jones industrial average .DJI dropped 145.61 points, or 1.12 percent, to 12,883.65. The Standard & Poor’s 500 Index .SPX lost 15.53 points, or 1.13 percent, to 1,363.00. The Nasdaq Composite Index .IXIC fell 35.20 points, or 1.17 percent, to 2,965.25.

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)

Sarkozy courts French far right after Hollande win

(Reuters) – French President Nicolas Sarkozy appealed directly to far right voters on Monday with pledges to get tough on immigration and security, after a record showing in a first round election by the National Front made them potential kingmakers.

Hollande piped Sarkozy in Sunday’s 10-candidate first round by 28.6 percent to 27.2 percent, but National Front leader Marine Le Pen stole the show, surging to 17.9 percent, the biggest tally a far-right candidate has ever managed.

Her performance mirrored advances across the continent by anti-establishment Eurosceptical populists from Amsterdam and Vienna to Helsinki and Athens as the euro zone’s grinding debt crisis deepens anger over government spending cuts and unemployment.

“National Front voters must be respected,” Sarkozy told reporters as he left his campaign headquarters in Paris. “They voiced their view. It was a vote of suffering, a crisis vote. Why insult them? I have heard Mr. Hollande criticizing them.”

The unpopular Sarkozy, the first sitting president to be forced into second place in the first round of a re-election bid, now faces a difficult balancing act to attract both the far-right and centrist voters he needs to stay in office.

The weak showing by Sarkozy spooked investors already nervous about European governments’ ability to service their debts, helping to send French stocks and bonds lower.

Returning to the campaign trail on Monday, Sarkozy hammered home promises to toughen border controls, tighten security on the streets and keep industrial jobs in France - signature issues for Le Pen at a time of anger over immigration, violent crime and unemployment running at a 12-year high.

After five turbulent years leading the world’s fifth economy, Sarkozy could go the way of 10 othereuro zone leaders swept from office since the start of the crisis in late 2009.

Hollande has vowed to change the direction of Europe by tempering austerity measures with higher taxes on the rich and more social spending. Polls published on Sunday predicted he would win the run-off with between 53 and 56 percent of votes.

But the strong showing of Le Pen, gravel-voiced 43-year-old daughter of National Front founder Jean-Marie Le Pen, offered Sarkozy a glimmer of hope by suggesting there are more votes up for grabs on the right than had been thought.

“Marine Le Pen’s breakthrough throws the second round wide open,” read the front page of right-leaning Le Figaro, while left-wing Liberation read: “Hollande leads. Le Pen the killjoy”.

HIGH TURNOUT

Hollande blamed Sarkozy for fuelling the rise in the far right and said he would make no attempt to seek National Front votes. “Since some voters supported them out of anger, I will listen to them…but I will not court the far right,” he said.

On a strong turnout of 80.2 percent, more than a third of voters cast ballots for protest candidates outside the mainstream, foreshadowing a possible reshaping of France’s political balance of power at parliamentary elections in June.

Le Pen’s focus is now on securing a strong National Front showing in the parliamentary vote, and she is keeping her distance from Sarkozy, describing him as doomed.

“Faced with an outgoing president who will leave a much weakened party, we are the only true opposition to the neo-liberal left,” she told cheering supporters on Sunday.

She said she would give her view on the runoff at a May Day rally in Paris next week. Leading National Front figures, including Le Pen’s partner and party vice-president Louis Aliot, suggested that she would not formally endorse either candidate.

It is hardly the first time Sarkozy has appealed to National Front voters before a runoff – the tactic him win his first mandate in 2007. Le Pen’s strategy director Florian Philippot said it would not work twice: “The French no longer fall for this electioneering game Sarkozy plays.”

Financial market analysts say whoever wins in two weeks’ time will have to impose tougher austerity measures than either candidate has admitted during the campaign, cutting public spending as well as raising taxes to cut the budget deficit.

By Daniel Flynn and Brian Love

Haitong Raises $1.7 Billion in Hong Kong Share Sale

 

The Chinese brokerage firm Haitong Securities has raised $1.7 billion through the sale of shares in Hong Kong, the largest public offering in the world so far this year, according to a person with direct knowledge of the matter.

The firm, which already is publicly traded in Shanghai, sold approximately 1.23 billion shares at 10.60 Hong Kong dollars, or $1.37, each, according to the term sheet obtained by DealBook on Friday.

The pricing of Haitong’s Hong Kong sale represents a 16.6 percent discount to the firm’s closing share price in Shanghai on Friday. It also was at the bottom end of firm’s price range of 10.60 Hong Kong dollars to 11.18 Hong Kong dollars.

The company’s stock will start trading in Hong Kong next Friday. The firm is expected to use the money to expand its brokerage business in China.

Haitong’s listing comes at a difficult time for the broader Chinese economy, whose growth slowed to 8.1 percent in the first three months of the year. It was the fifth-consecutive slowdown in the country’s quarterly growth, as fears mount that the Chinese economy will not be able to maintain its rapid expansion.

Other companies to raise money in the public markets in 2012 include the Dutch cable operator Ziggo and the Swiss trade and marketing company DKSH, which raised a combined $2 billion dollars earlier this year.

Allison Transmissions, a commercial vehicle transmission maker based in Indianapolis also raised $690 million in March.

Haitong and JPMorgan Chase were the joint underwriters of the offering. The firms, along with Credit SuisseDeutsche BankCitigroup and UBS, also were global coordinators for the listing.

Apollo Raises Offer Again for Great Wolf Resorts

 
The resort park operator said on Friday that it had agreed to yet another raised offer by from Apollo Global Management, worth $262.4 million. The bid of $7.85 a share again tops a proposal by KSL Capital Partners, which had raised its offer for Great Wolf only 24 hours before.

The bidding for Great Wolf Resorts is coming fast and furious.

Friday’s new bid continues Apollo’s jousting with KSL, in one of the few public bidding wars between twoprivate equity firms in recent memory.

Apollo’s new offer is 57 percent above its original bid of $5 a share. It is also 87 percent higher than Great Wolf’s stock price the day before that original offer.

As part of the new deal, Apollo now stands to receive up to $10.47 million in termination fees and expense reimbursements if Great Wolf terminates the merger agreement.

Shares of Great Wolf leaped 6.9 percent in premarket trading to $7.93, suggesting that investors believe an even higher bid may be in the offing.

TPG Abandons $818 Million Bid for GlobeOp

 

LONDON – The private equity firm TPG Capital on Friday said it was abandoning its £508 million ($818 million) bid for GlobeOp Financial Services, a major provider of administrative services for hedge funds

The announcement leaves SS&C Technologies Holdings, a software development company, as the lead bidder. Last month, SS&C made a rival £572 million offer for GlobeOp, which is based in London.

“Over the past few weeks TPG had been pursuing a number of strategic alternatives in order to revise its offer,” TGP said in a statement. “However, after substantial investigation, TPG has determined that an improved offer could not be concluded on terms which would deliver sufficiently strong returns to all stakeholders.”

GlobeOp, founded in 2000, provides administrative services for hedge funds, including calculating the net asset values of those firms’ portfolios. It has about 200 clients and oversees $173 billion in assets, according to the company’s Web site.

In early afternoon trading in London, the company’s share price had fallen 1.5 percent.

EBay quarterly results top expectations

(Reuters) – EBay Inc (EBAY.O) reported better-than-expected increases in quarterly sales and profit on Wednesday, driven by growth in the e-commerce company’s Marketplaces and PayPal businesses.

EBay also edged up its 2012 forecasts, helping propel the company’s shares 7.9 percent higher to $38.69 in after-hours trading – the highest level since late 2007.

“It’s one of their better reports that I’ve seen in several years,” said Colin Sebastian, an analyst at Robert W. Baird & Co.

EBay shares have gained more than 15 percent so far this year, more than double the gain of rival Amazon.com (AMZN.O), on optimism about a growth recovery at its online Marketplaces business and an expansion of PayPal from its online roots into physical stores.

“Both PayPal and the Marketplaces were very healthy in the quarter,” Sebastian said. “It’s not every quarter that you see both doing well.”

That suggests management’s strategy of turning around its online Marketplaces while expanding PayPal is working.

“Marketplaces is improving and PayPal continues to gain market share and that’s without any contribution from the offline initiatives,” Sebastian said.

‘TURNED THE CORNER’

EBay’s online marketplaces, the largest in the world, have lagged the growth of e-commerce and Amazon.com for several years.

Under Chief Executive John Donahoe, eBay has invested a lot to improve the buying experience on the sites, partly by prodding sellers to provide more services such as free shipping and easier returns.

Donahoe said on Wednesday that these changes have paid off, announcing during a conference call with analysts that the Marketplaces business “has turned the corner.”

EBay said first-quarter gross merchandise volume on its U.S. Marketplace business was $6.37 billion, excluding vehicle sales. That was up 13 percent from a year earlier. Doug Anmuth, an analyst at J.P. Morgan, was expecting $6.13 billion in U.S. GMV, ex-autos.

EBay’s online marketplace added two million active users during the first quarter, the most in three years, Donahoe noted.

PAYPAL

PayPal’s Total Payment Volume was $34 billion in the first quarter, up 24 percent from a year earlier. J.P. Morgan’s Anmuth had forecast $33.28 billion.

PayPal’s transaction margin – a measure of the payment service’s profitability – was 65.6 percent in the first quarter, up from 64.8 percent in the previous quarter.

Chief Financial Officer Bob Swan said this was the highest margin level in five years.

EARNINGS, FORECASTS

EBay said first-quarter profit was $725 million, or 55 cents per share, compared with $619 million, or 47 cents per share, a year earlier. Revenue was $3.3 billion, up 29 percent from the same period in 2011.

EBay was expected to report earnings of 52 cents per share in the first quarter on revenue of $3.15 billion, according to Thomson Reuters I/B/E/S.

EBay forecast second-quarter profit of 53 cents to 55 cents per share and revenue of $3.25 billion to $3.35 billion. For the whole of 2012, the company expects earnings of $2.30 to $2.35 per share and revenue of $13.8 billion to $14.1 billion.

Wall Street was looking for earnings per share of 55 cents for the second quarter and $2.30 for the full year. Revenue was expected to be $3.36 billion in the second quarter and $13.85 billion for the whole of 2012.

Earlier this year, eBay forecast first-quarter earnings of 50 cents to 51 cents a share and revenue of $3.05 billion to $3.15 billion. For the whole of 2012, eBay previously forecast profit of $2.25 to $2.30 per share and revenue of $13.7 billion to $14 billion.

“They are doing a fantastic job for long-term shareholders,” said Bill Smead of Smead Capital Management, which owns eBay stock. “They consistently under-promise and over-deliver.”

EBay likely kept its full-year estimates restrained because the outlook for the economy is still uncertain, Sebastian noted.

By Alistair Barr; editing by Andre Grenon

Stock futures cut gains after jobless data

(Reuters) – Stock index futures pared gains on Thursday after data showed new claims for weekly jobless benefits came in above forecasts and the figure for the previous week was revised higher, dampening hopes of a pick-up in job creation in April.

S&P 500 futures rose 1.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures added 21 points, and Nasdaq 100 futures rose 9.75 points.

By Edward Krudy; editing by Jeffrey Benkoe)