Monday, December 16, 2013

"McClendon’s New Fee Machine"

This is amusing/astonishing: Did the ex-Chesapeake CEO ring the bell at the MLP top?

The S-1 also makes it clear that AECP will pay ENORMOUS fees to the general partner (ARC) and Manager (McClendon). You’ve been warned — the word “fee(s)” appears 379 times in the S-1.

If the full $2 billion is raised, ARC will pocket ~$200 million in offering fees and commissions. The management fee to McClendon will be ~$70 million per year initially, and increase over time. The partnership will also reimburse ARC and McClendon for certain G&A expenses.

Then the M&A fees… ARC and McClendon will collect fees up to 3.0% of any acquisition contract price and 1.0% of any disposition contract price, including the reimbursement of G&A expenses associated with the transactions. There’s also a financing fee, such that the partnership will pay ARC and McClendon 0.75% of the principle amount raised, including draws on a credit facility.
A correspondent writes,
"I wouldn't pay Henry Singleton those kind of fees"
Here's a link to the S-1 filing.

Aubrey/AECP had the biggest booth at the North American Prospect Expo in Denver last week.


Joe Nelson said...

Like a boss!

CP said...

I wouldn't have guessed that people would be that stupid. I will still be surprised if he can sell the interests. I will probably be surprised.

eah said...

I will still be surprised if he can sell the interests.

It'll be over-subscribed.