A special committee of Dell Inc.‘s board again criticized a stock repurchase proposal by Carl C. Icahn on Monday, arguing that his plan suffered from a financing shortfall that made it less valuable than the company’s planned $24.4 billion sale to Michael S. Dell.
In a presentation for investors, the Dell committee used math once again to contend that the plan by Mr. Icahn would be worth less to shareholders than he has promised. Starting with the $15.6 billion in cash that Mr. Icahn has calculated would be available for his proposal â€" in which Dell would buy 1.1 billion shares for $14 each â€" the committee then subtracted expected near-term debt maturities and minimum cash needs.
Ultimately, Dell would have only $12.7 billion available. That would mean that the company could offer only $8.15 in cash if all shareholders aside from Mr. Icahn and his ally, Southeastern Asset Management, tender their shares. (Mr. Icahn and Southeastern together own an almost 13 percent stake.)
And that still assumes that Mr. Icahn can line up the requisite financing. So far, he has said that a “major investment bank†would provide $1.6 billion and that he would be willing to invest $2 billion.
The special committee also took a few other swings at Mr. Icahn, arguing that his plans ! lacked credibility. Mr. Icahn hasn’t provided evidence that he has fully committed financing as well as other information that the directors have requested.
Repeating an earlier argument, the Dell committee also highlighted the risks of leaving part of the company publicly traded as so-called “stub†equity. Clear Channel, the radio giant, left a part of itself on the public markets, and its shares have fallen significantly since its leveraged buyout.
The report on Monday follows a similar presentation by Mr. Dell and his partner, the investment firm Silver Lake. It is meant not only for investors. Representatives of the committee are scheduled to make their case to Institutional Shareholder Services, the biggest proxy adviser, on Monday.
I.S.S. generally prefers to consider materials that are publicly disclosed. So with Mr. Icahn and Southeastern also scheduled to present before the advisory firm on Monday, perhaps the investors will respond with their own voluminous PowerPoint presetation.
