Carl Icahn has been under pressure since May, when short seller Hindenburg Research alleged that his publicly traded conglomerate, Icahn Enterprises (IEP), used a high but unsustainable dividend yield to lure retail investors into a “at the Ponzi» transaction where assets were held at inflated prices. Hindenburg’s founder, Nathan Anderson, additionally alleged that Icahn had personally borrowed billions using his IEP shares as collateral, then invested the money in his own funds amid ongoing losses.
Shares of IEP fell 60% after Hindenburg’s report on May 1, falling to a low of $20 per share on May 25. Icahn, who made a name for himself as a corporate raider in the 1980s, saw his net worth plunge 10 billion dollars within a single day of the report’s release. But now the billionaire has disclosed in a filing with the SEC that he struck a deal with several banks to help right his beleaguered ship, sending IEP shares up 20% on Monday.
The surge also boosted Icahn’s net worth by more than $1 billion, Bloomberg reported, though it’s still lost more than $12 billion so far this year. IEP shares are now up more than 70% from the May low.
Carl Icahn owns around 85% of IEP, which has stakes in energy, food packaging, real estate and many other industries and was quick to call Hindenburg’s allegations ‘selfish’ in a statement in May, adding that he believed they were “only intended to generate profits on Hindenburg’s short position.
But now Icahn has been forced to rely on big banks, including Bank of America, Morgan Stanley, German Bank, and more to shore up existing loans that Hindenburg had questioned. According to a Form 8-K filed Monday with the SEC, the new agreement “modifies certain terms” of the IEP loans and will condense them into a single three-year term option while changing interest charges to a variable rate. . It also ensures that any collateral used by Icahn for personal loans is based on the net asset value rather than the market price of his IEP shares, the the wall street journal First of all reported. In May, Hindenburg alleged that IEP’s market value had been inflated by 200% over its net asset value.
A representative for Icahn did not respond to Fortunerequest for comments on the file.