UPDATE 1-Icahn seeks Dell share buyback, buys Southeastern stock
June 18 (Reuters) - Billionaire investor Carl Icahn on Tuesday laid out a new proposal for Dell Inc, calling on the No. 3 PC maker to buy back 1.1 billion shares and allowing the activist to become a larger stakeholder.
Icahn said in an open letter to Dell shareholders that he and Southeastern Asset Management would still seek to stop founder Michael Dell's buyout offer for the company, and if successful, elect new directors to the board at a shareholder meeting scheduled for July 18.
Those directors in turn would implement a $14 per share tender offer, he said in the letter. Icahn and Southeastern would agree not to tender in that offer.
Icahn plans to fund the tender offer with $5.2 billion of debt financing, together with $7.5 billion in cash available at Dell and $2.9 billion available through a sale of Dell receivables, leaving around $4.9 billion of cash available for ongoing Dell operations.
Icahn said a major investment bank had indicated its willingness to make available $1.6 billion and that Icahn and his affiliates would make available $2 billion if necessary.
Icahn told cable television network CNBC on May 10 that investment bank Jefferies would contribute $1.6 billion to the $5.2 billion bridge loan needed to finance his deal.
Icahn said the move was a response to fears regarding available financing for his proposal to recapitalize Dell.
A presentation by Dell's special committee on June 5 had challenged Icahn, saying the activist investor is almost $4-billion short of the cash needed to fund his proposal for a $12-per-share special dividend.
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.
In addition, Dell Inc's largest independent shareholder, Southeastern Asset Management, said it planned to sell about 72 million shares to Icahn, making him the company's largest external shareholder.
Icahn and Southeastern together hold about 13 percent.