| June 21
June 21 Jefferies & Co is launching on Monday
$5.2 billion in term loans that will back Carl Icahn's bid for
computer manufacturer Dell Inc, sources told Thomson
The funding will be launched on a 4:00 p.m. lender call that
billionaire investor is expected to join.
The $5.2 billion is split between a $2.2 billion six-year
term loan B-1 and a $3 billion three-year term loan B-2. The
six-year tranche will have standard 1 percent amortization,
while the shorter-dated tranche amortizes at 10 percent.
Icahn was not immediately available for comment.
As previously reported, initial price guidance in May was in
the LIB+350 area, subject to change due to market conditions.
Earlier this week, Icahn reiterated his interest in owning
Dell, saying in a telephone interview with Thomson Reuters LPC
on Tuesday that he was moving forward with his plans to line up
$5.2 billion in credit facilities. His comments echoed
statements he made earlier that day in an open letter to Dell
"Nothing has changed regarding the financing," Icahn said in
the interview. "We expect to have $5.2 billion in the next
couple of weeks. Our investment bank is already committing $1.6
billion and my affiliates and I would provide $2 billion, if
Icahn's letter to Dell's shareholders came on the heels of a
series of reports that Icahn could exit the Dell race after
struggling to raise the $5.2 billion in debt he needed to back a
leveraged recapitalization he proposed to Dell's board on May 9.
In May, Icahn and Southeastern Asset Management initiated
talks with banks and asset managers to line up financing to back
a leveraged recapitalization of Dell as an alternative to an
existing buyout offer led by Dell and Silver Lake Partners for
$13.65 a share, or $24.4 billion. Jefferies has already
committed $1.6 billion.
FUNDING SEEN READY BEFORE JULY 18 VOTE
Icahn is expected to have the financing lined-up for a July
18 shareholder vote on the Silver Lake bid.
Icahn is offering a new path for shareholders. Under the May
9 leveraged recapitalization plan, Icahn proposed giving
shareholders the option of receiving either a distribution of
$12 per share in cash or $12 per share in stock valued at $1.65
per share. Now, Icahn is asking that Dell shareholders agree to
a tender offer for 1.1 billion shares at $14 apiece in a stock
Icahn and Southeastern, which together own about 13 percent
of Dell stock, argue that the Dell and Silver Lake offer of
$13.65 undervalues the company and that the recent numbers
reported by Dell are understated.
"Despite the company using scare tactics concerning the
company's health, you cannot get away from the fact that their
own consulting firm, BCG, believes the company would earn $3.3
billion for 2014," Icahn said in the interview. "This means the
670 million shares left outstanding after our tender will earn
$3.72 per share."
Dell's proposed take-private sale price has undergone
several iterations starting at $11.22 to $12.16 per share, a
pricing proposed by Silver Lake in October during the early
stages of the take-private conversations.
In the letter, Icahn revealed he is now Dell's
second-largest shareholder after Michael Dell. This, after he
purchased half of Southeastern's Dell shares for $13.52 apiece,
bringing Icahn's total ownership to 152 million shares, or 9
percent of company shares.
Dell shares closed on Friday down 0.1 percent at $13.35.