Dell, Icahn Trade Allegations As Vote Nears

Jun 25 2013 | 10:23am ET

With just 23 days to go before shareholders vote on Dell Inc.'s proposed leveraged buyout, the temperature is rising in the battle over the $24.4 billion deal.

The special committee of the computermaker's board of directors issued its latest salvo yesterday, accusing Carl Icahn—who opposes the buyout, led by Dell founder Michael Dell and private-equity firm Silver Lake Partners—of fudging the math on his counter-proposal, a $16 billion share buyback program. The committee, which is backing the Dell-Silver Lake deal, said that Icahn and his partners, Southeastern Asset Management, remain $2.9 billion short of funding.

The Dell committee made a similar allegation about Icahn and Southeastern's initial plan, a leveraged recapitalization. The committee also said that Icahn is has underestimated the amount of cash Dell needed to operate, to the tune of $1.5 billion.

The committee said that Icahn and Southeastern's plan "lacks credibility" and accused Icahn of inconsistency.

Neither are taking the allegations lying down. The two last night issued a defense of their plans, which they presented to proxy advisory Institutional Shareholders Service. ISS' recommendation is expected to play a big role in the success or failure of the Dell-Silver Lake deal.

While Dell says that his company can't transform itself as a public concern beholden to shareholders, Icahn and Southeastern say it can. And they blasted Dell's performance as CEO since his return to the company six years ago, noting that its stock price had fallen 44% and its share of the PC market 25%.

Further, they said that their plan would actually leave Dell with less debt than the going-private transaction.

Also yesterday, Jefferies & Co. launched a covenant-lite loan package designed to provide $5.2 billion in financing for Icahn's deal.

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