Jefferies & Co will provide $5.2 billion in term loans to back Carl Icahn's bid for computer manufacturer Dell Inc, sources told Thomson Reuters LPC.
The funding will be launched on Monday at a 4:00 p.m. lender call that the billionaire investor is expected to join, the sources said.
The $5.2 billion is split between a $2.2 billion six-year term loan B-1 and a $3 billion three-year term loan B-2. The six-year tranche will have standard 1 percent amortization, while the shorter-dated tranche amortizes at 10 percent, they said.
Icahn declined to comment on details of the term loans on Friday.
As previously reported, initial price guidance in May was in the LIB+350 area, subject to change due to market conditions.
Earlier this week, Icahn repeated his interest in owning Dell, saying in a telephone interview with Thomson Reuters LPC on Tuesday that he was moving forward with his plans to line up $5.2 billion in credit facilities. His comments echoed statements he made earlier that day in an open letter to Dell shareholders.
"Nothing has changed regarding the financing," Icahn said in the interview. "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's letter to Dell's shareholders came on the heels of a series of reports that Icahn could exit the Dell race after struggling to raise the $5.2 billion in debt he needed to back a leveraged recapitalization he proposed to Dell's board on May 9.
In May, Icahn and Southeastern Asset Management initiated talks with banks and asset managers to line up financing to back a leveraged recapitalization of Dell as an alternative to an existing buyout offer led by Dell and Silver Lake Partners for $13.65 a share, or $24.4 billion. Jefferies has already committed $1.6 billion.
FUNDING SEEN READY BEFORE JULY 18 VOTE
Icahn is expected to have the financing lined up for a July 18 shareholder vote on the Silver Lake bid.
Icahn is offering a new path for shareholders. Under the May 9 leveraged recapitalization plan, Icahn proposed giving shareholders the option of receiving either a distribution of $12 per share in cash or $12 per share in stock valued at $1.65 per share. Now, Icahn is asking that Dell shareholders agree to a tender offer for 1.1 billion shares at $14 apiece in a stock buyback.
Icahn and Southeastern, which together own about 13 percent of Dell stock, argue the Dell and Silver Lake offer of $13.65 undervalues the company and that the recent numbers reported by Dell are understated.
"Despite the company using scare tactics concerning the company's health, you cannot get away from the fact that their own consulting firm, BCG, believes the company would earn $3.3 billion for 2014," Icahn said in the interview on Tuesday.
"This means the 670 million shares left outstanding after our tender will earn $3.72 per share." Dell's proposed take-private sale price has undergone several iterations starting at $11.22 to $12.16 per share, a pricing proposed by Silver Lake in October during the early stages of the take-private conversations.
In the letter, Icahn revealed he is now Dell's second-largest shareholder after Michael Dell, after he purchased half of Southeastern's Dell shares for $13.52 apiece. That brings Icahn's total ownership to 152 million shares, or 9 percent of the company's shares.
Dell shares closed on Friday down 0.1 percent at $13.35.