Activist investor Carl Icahn said Monday that he has raised $5.2 billion to finance his plan to recapitalize struggling personal computer maker Dell Inc. (DELL) and urged the special committee of the company's board to hold a direct, face to face meeting with him.
Icahn and Southeastern Asset Management are trying to block Dell founder CEO Michael Dell and private equity firm Silver Lake Partner's $24.4 billion bid to take the company private.
At May-end, Dell's special committee had unanimously recommended that stockholders vote to approve the company's merger deal with Michael Dell and Silver Lake, at a special meeting of stockholders to be held on July 18. The deal was initially agreed in February.
In a letter to Dell stockholders and members of the Dell special committee, Icahn said that he has obtained lender commitments for the $5.2 billion in debt financing, including $1.6 billion from Jefferies Finance LLC. Icahn noted that Jefferies has completed the paperwork and the commitment letters will be publicly filed after the market close on Monday.
Icahn said in his letter, "With that we put an end to the unwarranted speculation by Dell that our money would not be available."
Icahn noted that with the $5.2 billion in committed debt financing, $7.5 billion from cash on Dell's balance sheet and $2.9 billion to be derived from the sale of receivables, Dell will have the aggregate $15.6 billion required to conduct his proposed self tender by Dell for about 1.1 billion shares at $14 per share.
Icahn said, "As always, it is our desire that our proposal be treated as a Superior Proposal made by an Excluded Person under the Merger Agreement, and thereby save stockholders $270 million in additional break-up fees that may otherwise be claimed by Silver Lake."
Icahn added, "In other words, in our proposal tendering stockholders would receive $14 per share for at least 72% of their shares and, based on this BCG analysis, their remaining shares would be earning between $3.72 and as high as $5.51 per share. We therefore believe that it is self-evident our proposal is far superior to the $13.65 per share offered by Michael Dell/ Silver Lake."
Icahn added that it would be a bad outcome for stockholders and "reflect terribly" if Michael Dell and Silver Lake earned substantial returns on their investments while other stockholders are forced to sell. Further, Icahn said that it would be even worse if Dell were sold or broken up by Michael Dell and Silver Lake in a transaction or transactions with one or more strategic acquirers for a very large profit.
In mid-June, Icahn had urged Dell to buy back 1.1 billion shares at $14 per share for a total of $16 billion, saying that he and Southeastern Asset Management would agree not to tender their shares in that offer. Icahn also said that he and Southeastern Asset Management would strive to scuttle Michael Dell's buyout offer for the company, and if successful, elect new directors to the board at a shareholder meeting set for July 18.
Meanwhile, the special committee of Dell's board said it has reviewed Icahn's letter and would be pleased to review any additional information, including financing commitments that it may receive from him regarding his recapitalization proposal.
DELL closed Monday's trading at $13.31, down $0.01 or 0.11 percent on a volume of 19.90 million shares.
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