Carl Icahn’s firm OKs buyback, shares rise in support of its debt

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(Bloomberg) — Carl Icahn's holding company authorized a buyback equal to about 27% of its shares trading on the open market, potentially boosting the share price as the financier struggles with a short seller.

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Icahn Enterprises LP's board of directors approved the $500 million buyback on May 9, according to a regulatory filing. It marks the first time that the company, which invests in a wide range of businesses, has adopted a formal share repurchase program since 1987, public documents show.

The filing also revealed that Icahn increased the number of shares pledged to secure his personal loan. More than half of the firm's shares are now pledged to secure their margin loans. The company did not respond to messages seeking comment.

Shares of Icahn Enterprises have lost more than a third of their value since short seller Nate Anderson's Hindenburg Research released a report last week that claimed the company was overvalued, claiming it was inflated. Evidence of valuation of property made. Icahn, 87, has a record of fighting corporate battles, including a spat with billionaire investor Bill Ackman over Herbalife Ltd., which took over Wall Street a decade ago.

Based on Wednesday's closing price, the buyback will allow Icahn Enterprises to repurchase approximately 15.5 million shares, or approximately 27% of the publicly traded float. Depending on how it's conducted, a buyback of that magnitude could send Icahn Enterprises share price soaring, potentially squeezing out short sellers like Hindenburg.

The repurchase authorization is for an indefinite period, according to the filing, and does not expire until approved by the board. The company may buy back stock on the open market for cash through tender offers or in privately negotiated transactions.

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risk factor

While the company has approximately 369 million shares outstanding, Icahn controls more than 84% of the stock through affiliates. There are about 58 million shares worth about $1.86 billion left to trade on the open market.

Icahn has pledged more than three times its publicly traded float to secure its margin loans, according to the filing, which revealed an increase in the number of units pledged under a new company risk factor. Is. More than half of the outstanding shares of Icahn Enterprises have been pledged to secure Icahn's personal debt.

As of Monday, Icahn had pledged 206 million shares worth about $6.2 billion, up from about 168 million in February.

According to the filing, Icahn owns his shares through intermediaries, whose lenders include Morgan Stanley and . It is unclear whether these loans are the same as the margin loans referred to in Icahn Enterprises' filings.

After the fall of Icahn Enterprises last week, Ackman tweeted that his rival's company had the “personnel quality” to make up for Hindenburg's smaller position. Ackman eventually exited his $1 billion short position on Herbalife after Icahn squeezed him by buying millions of shares in the nutrition company.

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