Icahn seeks up to $7 billion for Dell bid

Thu May 23, 2013 3:16pm EDT
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By Michelle Sierra

NEW YORK (Reuters) - Activist investor Carl Icahn and Southeastern Asset Management Inc have initiated talks with banks and asset managers to line up commitments for as much as $7 billion in bridge loans to back their leveraged recapitalization proposal for Dell Inc, banking sources told Thomson Reuters LPC on Thursday.

Jefferies & Co is leading the deal.

Icahn and Southeastern are looking to lock in the financing before Dell shareholders meet in July to vote on a rival take-private offer from CEO Michael Dell and Silver Lake Partners. Icahn and Southeastern are seeking at least $5.2 billion and as much as $7 billion in lender commitments, sources said.

"They want the shareholders to know that they have an alternative," another source said.

Jefferies is understood to have committed $1.6 billion to the bridge loan.

The arranger is asking for commitments as large as $1 billion and is expected to have lenders lined up as early as next week.

Lenders committing to the deal are being offered a fee upfront of 3.5 percent, which is typical of these transactions. As an added sweetener, Icahn and Southeastern are also offering lenders an additional 7.5 percent of any incremental profit the two shareholders receive if Silver Lake prevails with an increased offer.

Pricing on the loan is guided at 350bp over Libor, though pricing could change as syndication efforts are only in the early stages, the same sources said.   Continued...

Investor Carl Icahn speaks at the Wall Street Journal Deals & Deal Makers conference, held at the New York Stock Exchange, in this June 27, 2007, file photo. REUTERS/Chip East/Files