A Dell Inc special committee challenged Carl Icahn on Wednesday, saying the activist investor is almost $4 billion short of the cash needed to fund his proposal for a $12-per-share special dividend.<\/p>\n
The 39-page presentation issued on Wednesday by the board committee was the most detailed rebuttal yet to Icahn, who was not immediately available to comment.<\/p>\n
Michael Dell and private equity firm Silver Lake have proposed a $24.4 billion buyout of the personal computer maker. Icahn and Southeastern Asset Management have made a counter offer that would pay the special dividend and allow Dell shareholders to keep their shares.<\/p>\n
Icahn has said that if Dell rebuffed his dividend plan and put Michael Dell’s offer to a vote, he and Southeastern would seek to nominate an alternate slate of 12 directors to challenge the current board and take control of the company.<\/p>\n
The Dell board committee report pointed to a “significant liquidity gap” that could reduce the promised $12 dividend to as little as $8.50.<\/p>\n
By the committee’s reckoning, Icahn’s cash allocation did not factor in Dell’s debt service, expected cash flow shortfalls and various termination and other fees related to the Michael Dell\/Silver Lake deal.<\/p>\n
Taking all of those items into account, the presentation said Icahn would be $3.9 billion short.<\/p>\n
The presentation also raised questions about Icahn’s plan to let shareholders keep their Dell stock as part of the recapitalization.<\/p>\n
Dell would need to trade at significantly higher multiples of enterprise value to operating earnings in order to make Icahn’s math work, the committee said – a scenario it suggested was unlikely given the company’s weakening performance.<\/p>\n
Instead, the committee recommended stockholders vote for the $13.65-per-share cash offer from Silver Lake and Michael Dell.<\/p>\n
Dell shares rose 1 cent to $13.43 in early trade.<\/p>\n
Dell presented with more alternatives to buyout<\/a><\/strong><\/p>\n Dell, Icahn reach investment deal<\/a><\/strong><\/p>\n Dell faces opposition in buyout move<\/strong><\/a><\/p>\n Shareholders demand Dell open its books<\/strong><\/a><\/p>\n