Jefferies Prepares $5.2 Billion Loan For Icahn’s Bid For Dell

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Global investment banking firm, Jefferies Group LLC (NYSE:JEF) is preparing a $5.2 billion term loans for activist investor, Carl Icahn to support his proposal to acquire the embattled PC maker Dell Inc. (NASDAQ:DELL), according to report from Thomson Reuters based on information from sources.

Dell Inc

According to the sources, Jefferies Group LLC (NYSE:JEF) will announce the funding during a lender call around 4pm on Monday. Icahn is expected to join the investment banking firm during the event,

The sources added that the $5.2 billion funding will be divided into two term loans; a $2.2 billion six-year term loan B-1 with a standard 1 percent amortization, and a $3 billion three-year term loan B-2 with 10 percent amortization. Thomson Reuters said that Icahn refused to provide a comment regarding the details of the term loans.

Last week, Icahn sent another letter to his fellow shareholders reiterating his intention to acquire Dell Inc. (NASDAQ:DELL), and informed them that he will proceed with his plan to obtain a $5.2 billion of senior debt financing, which will be made available for the PC maker to guarantee his tender offer.

Icahn Urged Dell To Begin A Share Tender Offer

In addition, Icahn urged Dell Inc. (NASDAQ:DELL) to begin a $14 per share tender offer for the approximately 1.1 billion shares of the company,  and he maintained his position that the $13.65 per share or $24.4 billion leveraged buyout offer of the PC Maker’s CEO, Michael Dell together with Silver Lake Partners substantially undervalues the company

In an interview with Thomson Reuters, Icahn repeated his statement in the letter. According to him,  “Nothing has changed regarding the financing. We expect to have $5.2 billion in the next couple of weeks. Our investment bank is already committing $1.6 billion and my affiliates and I would provide $2 billion, if necessary.”

Icahn released the letter in response to reports that he is struggling to raise the $5.2 billion funding, which prompted speculations that he might withdraw his proposal for Dell Inc. (NASDAQ:DELL).  In May, Icahn and Southeastern Asset Management submitted leveraged recapitalization transaction to the board of directors of the PC maker.

Under the leveraged recapitalization proposal, Icahn offered an opportunity for the shareholders of Dell Inc. (NASDAQ:DELL) to choose to receive a distribution of $12 per share in cash or $12 in additional shares of the company’s common stock valued at $1.65 per share. Icahn and Southeaster Asset Management collectively own 13 percent stake in the shares of the PC maker. Icahn

Last Friday, Mr. Dell issued a new rationale to encourage the shareholders of the company to support the go-private transaction to ensure the future success of Dell Inc. (NASDAQ:DELL). According to him, transforming Dell from a PC-focused business into Enterprise Solutions and Services (ESS) focused business is critical for the growth of the company. However, he emphasized that carrying out the transformation is more difficult for Dell as a public company because it requires time and money.

Mr. Dell pointed out, “Dell will be better able to aggressively pursue its long-term business strategy and thereby increase the speed and likelihood success of the transformation” as a private company owned by two financially strong equity investors.

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