By
Godfrey Benjamin
May 11th, 2023
Following the publication of the Hindenburg Research study, Icahn Enterprises’ stock fell to a low of $31.78, the company’s lowest value in more than ten years.
Billionaire investor Carl Icahn and several banks have reached an agreement to amend loan terms that previously tied Icahn’s personal loans to the trading price of Icahn Enterprises (NASDAQ: IEP).
According to reports from the Wall Street Journal, Carl Icahn and lender banks have now finalized amended loan agreements that untie Icahn’s personal loans from the trading price of Icahn Enterprises. This significant move aims to address the concerns raised by the short-seller, Hindenburg Research report and create a more stable borrowing arrangement for Icahn.
By untying Icahn’s personal loans from the trading performance of Icahn Enterprises, the amended agreement ensures that his borrowing terms are no longer at the mercy of the stock’s volatility. This separation offers Icahn the freedom to make financial decisions based on his personal objectives and market analysis, without the added pressure of his company’s stock price fluctuations.
According to people familiar with the matter, Carl Icahn has reached an agreement to increase the collateral provided for his loans and has outlined a plan to fully repay the loans within three years. This move not only mitigates potential risks associated with the loans but also provides greater assurance to stakeholders and investors.
Carl Icahn, a well-known investor, and businessman, has a long history in the financial world. Icahn Enterprises, his investment firm, has been active in a variety of industries, including energy, automobile, and real estate.
Icahn has become well-known for his activist investing method, which entails taking major holdings in firms and advocating for changes to increase shareholder value. Last year, the billionaire investor made a significant profit after investing up to $500 million in Twitter Inc.
Hindenburg Research’s Allegations on Carl Icahn and Ventures
In May, Hindenburg Research published a report on Icahn Enterprises, arguing that the corporation overvalued its holdings and paid dividends through a “Ponzi-like” structure. The investigation called into doubt the authenticity and transparency of Icahn Enterprises’ financial statements, focusing on the valuation of its holdings.
Hindenburg Research had highlighted concerns about Icahn’s IEP holding being heavily collateralized for unidentified margin loans. The research raised concerns regarding the use of more than 65% of IEP shares as collateral, expressing concerns about the potential risks involved.
At the time, Carl Icahn dismissed the report as “self-serving.” He stood firmly behind Icahn Enterprises’ financial statements, defending the accuracy and reliability of the company’s valuation practices and dividend distribution methods. Icahn emphasized that the report was an attempt to manipulate the market and benefit Hindenburg Research’s own interests.
Following the publication of the Hindenburg Research study, Icahn Enterprises’ stock fell to a low of $31.78, the company’s lowest value in more than ten years. This fall represents a lack of investor confidence and indicates the market’s reaction to Hindenburg Research’s concerns.
However, the recent agreement serves to reassure investors and stakeholders in Icahn Enterprises. By demonstrating a commitment to transparency and risk mitigation, Icahn and his lenders instill confidence in the company’s stability and management.