Chesapeake shares fall as loan increases

Shares down: Chesapeake increases 'bridge' loan

Reuters/Scanpix

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By News wires

 15 May 2012 16:10 GMT

Chesapeake Energy shares dropped as much as 6.5% early on Tuesday after sources said the natural gas producer had increased a new bridge loan to $4 billion from $3 billion.

The company, which faces a funding shortfall of about $10 billion this year, said on Friday that Goldman Sachs and Jefferies Group would provide it with $3 billion, Reuters reported.

Chesapeake's cash flows have shrunk as natural gas prices slumped to their lowest levels in a decade, putting pressure on the second-largest US producer of the fuel to raise money.

Corporate governance concerns have also weighed on Chesapeake's shares since Reuters reported last month that chief executive Aubrey McClendon had borrowed at least $1.1 billion against his personal stakes in the company's wells from lenders who also had dealings with…

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