Icahn, affiliates provide bulk of $5.2 billion Dell loan package
By Michelle Sierra and Leela Parker
(Reuters) - Billionaire investor Carl Icahn and affiliates provided $3.42 billion, or 66 percent, of the $5.2 billion in committed debt financing to back his proposed leveraged recapitalization plan for personal computer maker Dell Inc.
Lead arranger Jefferies & Co committed $1.6 billion, or 30 percent of the overall financing, according to a Securities and Exchange Commission filing Monday. An additional 14 institutional funds, including pension funds and insurance companies, provided the remainder of about $179 million.
Though the $5.2 billion deal was shown to a mix of U.S. and foreign banks, asset managers, hedge funds and collateralized loan obligation (CLO) managers, the small list of participants suggests Icahn was unable to attract enough interest from alternative sources of capital, sources told Thomson Reuters LPC.
Other market participants evaluating the transaction said it signals Icahn may never have aimed to broadly distribute the deal in the first place.
Icahn on Monday asked for a meeting with Dell Inc's special board committee after lining up the loan commitments to back up his Dell bid. Icahn and Southeastern Asset Management are asking shareholders to tender 1.1 billion shares at $14 apiece in an offer that rivals Michael Dell's and Silver Lake Partners' $24.4 billion buyout offer of $13.65 a share.
The financing commitment marks a crucial step forward for Icahn's bid for Dell. Still, it is contingent on a dozen board appointments, according to the SEC filing.
Unless all twelve of the nominees proposed by Icahn and Southeastern on May 13 are elected to Dell's board, the financing is unlikely to take place.
"It's an exit hatch," an institutional investor said of the condition. "This signals the financing will not happen at all. It's such a high hurdle to get all his guys on the board." Continued...