Takeover Bid For Dell Of Icahn Requires $5.2 Billion Loan

Takeover Bid For Dell Of Icahn Requires $5.2 Billion Loan

Carl Icahn is seeking a $5.2 billion loan from investors to support his takeover bid for Dell Inc. (NASDAQ:DELL). An unidentified source indicated that the US business magnate approached Jeffries Group LLC for a $2.2 billion loan with a six-year term. Another loan worth $3 billion will have a 3 1/2-year term.

The collaboration between Icahn and the bank aims to contest the $24.4 billion buyout of Michael Dell for his own company. Dell indicated that the plan of Icahn is not viable due to the $2.9 billion deficit. A bigger payout is offered by the plan of Icahn.

According to Gimme Credit LLC analyst David Novosel, investors are obviously eager to take note of new ideas. Although the terms of the proposal are currently uncertain, investors are eager to know the debt commitments, and it will be helpful if Icahn provides details of his takeover bid for Dell Inc. (NASDAQ:DELL).

The interest for the $2.2 billion loan is four percent higher than the offered rate of the London interbank with a minimum of one percent on the lending standard. On the other hand, the three-year loan will be 3.5 percent higher than Libor, which has a minimum of 0.75 percent.

The takeover bid for Dell Inc. (NASDAQ:DELL) of Icahn will request 1.1 billion shares to be tendered by the company at $14 each. In comparison, the proposal of Dell last February is at $13.65 per share. A July 18 special meeting is set for shareholders to vote on the proposal.

The takeover bid for Dell Inc. (NASDAQ:DELL) of Icahn will go down to around $8.15 per share when the shortfall is taken into consideration, according to the regulatory filing of the special committee of the board of Dell.

A $13.75 billion debt financing was offered in the original proposal that will take Dell private. The proposal includes a C slice of $1.5 billion, asset-back portion of $2 billion, bridge facilities of $3.25 billion, and B loan of $4 billion. The debt will be arranged by the Royal Bank of Canada, Barclays, Bank of America, and Credit Suisse Group AG.

Makor Capital analyst Albert Saporta said the success of the takeover bid for Dell Inc. (NASDAQ:DELL) of Icahn is unlikely.

Posted by James Fried on Tuesday June 25 2013, 3:47 AM EDT. Ref: Bloomberg. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0