Dell investor Carl Icahn has asked for a meeting with Dell's special board committee after lining up $5.2 billion in loans to show there is financial backing for his alternative buyout bid.
In a letter to Dell shareholders, Icahn said that investment includes a commitment of $1.6 billion from Jefferies Finance, as reported by Reuters. In the letter, Icahn said he hopes that the newly-filed loan agreements will set aside "unwarranted speculation by Dell that our money would not be available."
Unnamed sources told the publication that the $5.2 billion agreement includes two separate loans, a $2.2 billion, six-year term loan and a $3 billion, 3.5-year term loan. Underwriting and arrangement fees are covered. Icahn's overall tender offer will be financed through $7.5 billion cash, the $5.2 billion loan and $2.9 billion from capital owed by other companies.
Icahn and partner Southeastern Asset Management are pressing for the company to offer $14 for each of its approximately 1.1 billion shares. The investor's proposal is meant to secure more value for shareholders, but has previously been branded "unrealistic" by Dell's special committee. Dell's board suggested that Icahn's proposal would result in a shortfall, reduce dividends to $8.15 per share.
In comparison, company founder Michael Dell has offered $24.4 billion, equating to $13.65 per share in order to take the PC giant private.
Michael Dell argues that the PC market is changing rapidly and must evolve quickly in order to cater for shifting consumer demand and ensure the company's future competitiveness and survival. The company founder believes that Dell's future lies in Enterprise Solutions and Services (ESS) rather than personal computers.
If the alternative bid is successful, the loans will be available to a broader range of investors before September 30 this year. In response to Icahn's assurance of financial backing, Dell's special committee issued the following statement:
"The special committee 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 remains committed to achieving the best outcome for all Dell shareholders."
Dell's special board has recommended that shareholders accept the company founder's buyout offer. Voting is expected to take place on July 18.