MHR Fund Management has increased its stake in embattled U.S. truck and engine maker Navistar International Inc (NAV.N) to 14.99 percent, just shy of the 15 percent level that would trigger the company's poison pill defense.
MHR, run by activist investor Mark Rachesky, and its affiliates said in a filing with the U.S. Securities and Exchange Commission that it purchased another 25,000 shares of Navistar on Thursday, a day when the shares fell as the company withdrew its 2012 profit forecast and disclosed that the SEC was probing its financial statements.
That gives MHR and its affiliates, already Navistar's second-largest shareholder, a total of 10.275 million shares, according to the SEC filing. Navistar has 68.566 million shares outstanding, according to Reuters data.
Faced with three large investors who now hold about 45 percent of its outstanding shares, Navistar in June adopted a poison pill defense that would allow existing shareholders to buy new shares at a steep discount if any outside investor took a 15 percent or greater stake in the Lisle, Illinois-based company.
Navistar's largest shareholder, asset manager Franklin Resources Inc (BEN.N), has crossed that line with an 18.8 percent stake in the company. It boosted its holdings to that level before the poison pill was adopted, but cannot add further to its holdings without triggering the defense.
Rachesky did not respond to a request for comment on Tuesday. When his firm first disclosed it had taken a large position in Navistar in June, it said it might seek seats on the board or propose that the company be put up for sale.
A Navistar spokeswoman did not immediately return a call seeking comment.
Navistar's third-largest shareholder is billionaire activist investor Carl Icahn, who last year launched an unsuccessful campaign to merge Navistar with Oshkosh Corp (OSK.N) and now holds a 14.5 percent stake, according to Reuters data, with Mario Gabelli's Gabelli Funds holding the fourth-largest position at 7.2 percent.
Rachesky served as Icahn's chief investment officer before co-founding his own investment firm, but the two have not always seen eye to eye. MHR solidified its position as the largest shareholder of film studio Lions Gate Entertainment Corp LGF.N last year after Icahn gave up a long battle to take over that company.
Navistar shares were up 5 percent to $25.92 in morning trading on the New York Stock Exchange. They have fallen 35 percent this year, while the Thomson Reuters U.S. Heavy Machinery & Vehicles index .TRXFLDUSPMACF is little changed.
After struggling to win regulatory approval for a new technology to reduce emissions from its heavy diesel engines, Navistar in the past month changed course, saying it would use engines made by Cummins Inc (CMI.N) that incorporate the same urea-based emissions technology most of its rivals use.
(Reporting By Scott Malone; editing by John Wallace)