Dell's special committee wants more information from Carl Icahn and Southeastern Asset Management regarding the alternative proposal outlined in a letter to the board last week.
In its reply dated May 13, the special committee writes that it is not sure whether Icahn and Southeastern Asset Management intend to formulate the transaction as an actual acquisition proposal or as an alternative to consider in the event the pending $24.4 billion leveraged buyout by Silver Lake Partners and Michael Dell is not approved.
The special committee laid out eight clarifications or additional materials it would need to further consider the proposal.
Those items include a draft of a proposed definitive agreement and comprehensive information regarding the financing for the transaction.
"We need to understand the terms of the debt financing, and contingencies available if cash on hand or stockholder rollovers are less than anticipated," the committee wrote.
In addition, the committee wants to know the counterparty and terms of the proposed receivables sale or financing, arrangements to provide working capital or other liquidity following the closing.
"Your proposal does not appear to take into account the additional borrowings that would seem to be required to address the liquidity needs that would result from the extent to which you would use the company's cash in the transaction and the fact that you would sell accounts receivable, which would have the effect of reducing future cash flows," the committee wrote. "In addition to working capital, the company is likely to have other significant cash needs, such as approximately $1.7 billion of debt maturities within approximately 12 months after closing."
The special committee also wants commitment letters for at least 20 percent of Dell's shareholders that would take distributions in the form of Dell shares, analysis on the tax implications of those receiving additional shares, which members of Dell's senior management team Icahn and Southeastern expect to remain, and an operating plan for that management team.
Icahn had indicated last week he would not want CEO Michael Dell with the company if his proposal is approved.
"This information is important both to our assessment of the value of the proposed equity stub and to an evaluation of the financing and completion risk for a highly leveraged transaction of the kind you propose," the committee wrote.
PUBLISHED MAY 13, 2013