Billionaire activist-investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show, in New York, on Feb. 11, 2014.Brendan McDermid/Reuters
Billionaire activist investor Carl Icahn has amended the terms of his personal loans to separate them from the price of Icahn Enterprises’ IEP-Q depositary units, the investment firm disclosed in a filing on Monday.
The move comes months after short-seller Hindenburg’s criticism triggered a massive fall in the shares of his investment company.
Shares of Icahn Enterprises soared 15.9 per cent at $33.46 in the early hours of trading on Monday.
Icahn and its affiliates have entered into a three-year loan agreement with banks, including Bank of America, N.A., Bank of Montreal and Deutsche Bank AG, which amends and restates previous loan agreements with such lenders and consolidates all of Icahn’s borrowings, the filing said.
In the amended loan agreement, Icahn will provide additional collateral of $2-billion from his personal funds and 320 million IEP shares.
Icahn will repay a principal of $500-million on or before Sept. 1, eight quarterly principal payments of $87.5-million beginning a year after that, and a final principal payment of $2.5-billion at the end of the term.
The only thing that could now trigger a so-called margin call is movement in the net asset value of his company’s investments and not the depositary units’ price.
Hindenburg had called Icahn’s pledge of about 60 per cent of his IEP stake as collateral for margin loans risky, which could result in margin calls should the unit’s prices decline.
The short-seller accused IEP of overvaluing its holdings and relying on a “ponzi-like economic structure” to pay dividends. It also said IEP units were inflated by more than 75 per cent.
Icahn called Hindenburg’s report “self-serving” and vowed to “fight back.”