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Dell Board Claims Icahn’s Math Off by $3.9 Billion

They’ve sent a slide presentation to the SEC that will be used to persuade shareholders to support their go-private decision

The special committee of Dell's board and its JP Morgan advisers figure the Carl Icahn-Southeastern Asset Management counter to the $24.4 billion Michael Dell-Silver Lake buy-out offer can't be done without another $3.9 billion in financing.

They've sent a 37-page slide presentation to the SEC that will be used to persuade shareholders to support their go-private decision.

A lot of it is a rehash of what is already known except the analysis that claims Icahn's so-called leveraged recapitalization scheme doesn't have legs - in their words suffers from what they call a "liquidity gap."

Icahn suggests draining Dell's treasury and going $5.2 billion further into debt to pay shareholders a $12-a-share dividend in cash or stock and keep the company public with their participation.

What his proposal is evidently missing is the fact that Dell has to repay $1.4 billion in existing debt by next April. It also doesn't account for the $450 million termination fee it would take to get rid of Michal Dell and Silver Lake and underestimates how much cash the company needs to operate - roughly $1.7 billion.

The committee figures Icahn has to come up with another $3.9 billion or cut the dividend from $12 to $8.50 a share.

The CEO plans to pay $13.65 a share in cash for the company.

According to the slides the Dell cloud widgetry that's supposed to replace its poorly selling PCs isn't making a heck of a lot of money yet and faces serious competition, a negative $500 million acknowledgement that's supposed to spook shareholders into grabbing Mr. Dell's offer and taking it on the run rather than hang on in hopes of better days.

Icahn, who plans to wage a proxy fight to install his own directors, is supposedly shopping for a new CEO.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at) or paperboy(at), and by phone at 516 759-7025. Twitter: @MaureenOGara

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