Carl Icahn 2014, on eBay:
“I have never seen what looks to me to be such blatant disregard for fiduciary obligations to stockholders.” (1)
Carl Icahn 2005, according to the Washington Post: (2)
Carl Icahn is chairman of the board of XO and owns more than 60 percent of the company, a telecom-crash survivor that provides telephone and data communications services for businesses, using conventional wires and new-generation wireless hookups.
Just over a week ago, XO announced it is selling the wired part of its business for $700 million.
Selling it to . . . Carl Icahn.
XO said it will use most of the $700 million it gets from Icahn to pay back its debts and buy back its preferred stock.
Debt and stock owned by . . . Carl Icahn.
Companies he owns and controls hold all $213 million worth of XO’s preferred stock and more than 90 percent of its $392 million in debt, XO financial reports show.
The bottom line is that Icahn & company will give $700 million to XO. Then XO will give $600 million of that back to Icahn. He will end up owning XO’s traditional wired phone business outright. And he will still own his 60 percent stake in what’s left of XO.
Buyer and seller, debtor and creditor, Icahn’s simultaneous roles may sound like potential conflicts of interest. But in Securities and Exchange Commission filings, XO explains that a special committee of its board of directors weighed Icahn’s bid and declared it the best of the offers the company got for its wired business. Investment bankers determined Icahn’s offer to be “fair.” The stockholders will have the final say — they must vote on the transaction before it can go through.
Of course, stockholder approval is a foregone conclusion. As the company noted in one of its filings, “Mr. Icahn owns sufficient shares of our common stock . . . to assure the approval and adoption” of what he wants to do.
And the directors named by Icahn hired the investment bankers who put their stamp of approval on his offer.
XO referred questions about Icahn’s role in all these maneuvers to his office in New York; Icahn did not respond.
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