Icahn saying a stronger “I Can” with $5.2B debt-refinancing for Dell Inc (NASDAQ:DELL) bid
Carl Icahn has now got $5.2B in debt-financing which will add impetus to his rival-bid against the leveraged one that has been put forth for Dell Inc (NASDAQ:DELL), by Michael Dell and Silverlake Management. In June, Icahn tightened the reins on his bid and announced that he is raising his stake higher and also urged Dell to launch a tender offer of $14/ share for 1.1B shares. In an open letter to Dell shareholders and members of its special committee on Monday, Icahn along with his group said that they hold lender-commitments for debt financing of $5.2B.
Icahn is trying every tactic in the book to scuttle the planned $24.4B Dell buy-out by Michael Dell, the founder and Chief Executive, along with private-equity firm Silver Lake Management LLC. In a statement, the Round Rock, Texas-based Dell said that a special committee that is in charge of the buy-out proceedings has reviewed Icahn’s letter and that it will be looking at all new information that relates to his recapitalization proposal.
What is debt refinancing?
Debt financing is a method of raising funds for generation of working-capital. This capital is used to pay for endeavors or projects that the debt-issuer chooses to undertake. The issuer might opt to issue promissory notes, bonds or any other debt instruments as a way of financing the debt that is associated with that project. In lieu of purchasing the bonds or notes, the investor is given some kind of return over the original purchase-amount.
When it comes to debt-financing, the investor is anticipating earning some interest for a certain period of time. When the note or the bond is nearing expiry, the investor will receive the entire face-value of the bond, plus all the accrued interest, if any. In some cases, notes or bonds might be structured in a manner that they allow for periodic interest payments to the company’s investors right through the life of that debt instrument.