Chesapeake plunges, but company says it has no plans to pursue bankruptcy; tech drops

By Rebecca Melvin

New York, Feb. 8 – Chesapeake Energy Corp. was a focus of attention in U.S. convertibles on Monday after market players interpreted news that the Oklahoma City-based natural gas producer’s hiring of law firm Kirkland and Ellis LLP as a sign that bankruptcy is imminent for the company.

Chesapeake’s convertible bonds and preferred shares tumbled early, and a statement by the company at mid-morning, saying that it has no current plans to pursue bankruptcy, had little palliative effect on the convertibles.

Chesapeake’s common shares ended the session sharply lower, although off the lows, down $1.02, or 33%, at $2.04, after an early drop of more than 50% that triggered numerous circuit breakers that halted trading.

Overall, the convertibles market was “lower across the board,” a New York-based trader said, with several different dynamics all pulling the market downward.

Some tech names began to become unhinged on Friday after LinkedIn Corp. posted guidance for the current quarter that disappointed the market.

LinkedIn’s 0.5% convertibles due 2019 continued to trade around 91, the level to which it plunged on Friday amid a 43% plunge in the common shares. On Monday, shares of the Mountain View, Calif.-based business-oriented social networking service edged up to $109.97, which was better by $1.59, after plummeting $83.90, or 43.6%, to $108.38 on Friday.

The convertibles and shares of ServiceNow Inc., Workday Inc. and salesforce.com Inc. continued to drop on Monday.

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