Icahn Has $5.2 Billion in Financing to Back Dell Proposal

Billionaire investor Carl Icahn said he secured $5.2 billion in debt financing to support his latest attempt to scuttle the planned leveraged buyout of Dell Inc. (DELL) by founder Michael Dell.

Icahn and his affiliates obtained the financing with help from Jefferies Group LLC, which committed $1.6 billion, he said today in an open letter to Dell shareholders and directors. Icahn also called on the Round Rock, Texas-based company’s special committee handling the proposed buyout to “engage in a direct, face-to-face sit-down meeting” with his group.

“We put an end to the unwarranted speculation by Dell that our money would not be available,” Icahn said. “Dell’s recent aggressive PC pricing discounts are designed to buy meaningful market share while sacrificing near-term margins -- a strategy that we believe will benefit future owners.”

The disclosure of committed financing comes as Icahn attempts to counter a proposed $24.4 billion buyout of the struggling personal-computer maker by Chief Executive Officer Dell and private-equity firm Silver Lake Management LLC. Dell is seeking to take his company private after years of acquisitions in technology services, software and data-center equipment that have failed to reverse a decline in revenue and profit at the company, once the largest PC maker.

‘Best Outcome’

Dell’s special committee said in a statement it has “reviewed Mr. Icahn’s open letter and will be pleased to review any additional information, including financing commitments, that it may receive from him regarding his recapitalization proposal.” The committee said it “remains committed to achieving the best outcome for all Dell shareholders.”

CEO Dell said in a June 21 regulatory filing that Icahn’s proposal would add substantial debt, decrease financial flexibility and “hurt the company’s ability to weather an economic or business downturn.”

Icahn didn’t return a call to his office seeking comment. David Frink, a spokesman for Dell, declined to comment.

The company should make a tender offer for about 1.1 billion shares at $14 apiece as an alternative to a proposal from CEODell and Silver Lake, Icahn said last month. The activist investor said the buyback would address two shortcomings of the LBO offer: that it’s too cheap and that it doesn’t give shareholders the opportunity to profit from any improvement in Dell’s performance.

Dell’s special committee said Icahn’s proposal equates to a dividend of approximately $10 a share. CEO Dell and Menlo Park, California-based Silver Lake offered $13.65 a share, a 25 percent premium over Dell’s share price on Jan. 11, the last trading day before Bloomberg News reported the company was in talks to go private.

Dell’s shares fell less than 1 percent to $13.31 at the close in New York.

To contact the reporter on this story: Devin Banerjee in New York at dbanerjee2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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