Billionaire investor Carl Icahn has asked for a meeting with Dell’s special board committee after lining up US$5.2 billion (HK$40.3 billion) in loan commitments to back up his bid for a leveraged recapitalisation of the personal computer maker.
Icahn, in an open letter to Dell shareholders, said that financing commitments included US$1.6 billion (HK$12.4 billion) from Jefferies Finance, which will publicly file the papers after markets close on Monday.
“With that we put an end to the unwarranted speculation by Dell that our money would not be available,” Icahn said in the letter.
Obtaining the debt financing marks a critical step forward for Icahn’s and Southeastern Asset Management’s alternative offer for the company. Icahn and Southeastern are proposing that Dell buy back 1.1 billion shares at US$14 apiece.
The tender offer compares with founder Michael Dell’s and Silver Lake Partners’ US$24.4 billion buyout at US$13.65 a share, a price Icahn said substantially undervalues the company. Dell’s special board committee had recommended Michael Dell’s offer to shareholders.
Icahn’s efforts at putting together a superior competing bid for Dell have been rebuffed so far by the special committee, which has expressed concerns over the company’s liquidity position and future share price should his idea of a leveraged recapitalisation be implemented. Icahn asked for a face-to-face meeting with the board to discuss the offer.
The special committee said in a statement on Monday it had reviewed Icahn’s open letter and would also review any additional information, including financing commitments, that it received. It reaffirmed what it said was its commitment to achieving the best outcome for all Dell shareholders.
Icahn was expected to have the financing ready by Monday, ahead of an ISS meeting that could take place as early as this week. ISS is a shareholder advisory group that is expected to publish its view on Dell’s bid. A July 18 shareholder vote on Dell’s take private plan will follow.
Icahn’s proposed tender offer will be financed with US$7.5 billion of cash on Dell’s balance sheet, the US$5.2 billion credit facility and US$2.9 billion from the sale of receivables.
If Icahn’s alternative proposal prevails, the loans would launch to a broader range of institutional investors before September 30, or the three-month commitment period of the US$5.2 billion loans, according to sources.