Shares of Icahn Enterprises L.P. (NASDAQ: IEP) soared over 20% in intraday trading on Monday. The sudden upswing came as a result of Chair Carl Icahn reaching an agreement with banks that unties his personal loans from the price of the company’s stock. This development brings relief to investors and shareholders who were concerned about the impact of the previous allegations made against Icahn by short-seller Hindenburg Research.
Hindenburg Allegations and IEP’s Response
In May, Hindenburg Research made serious allegations against Carl Icahn, claiming that he had artificially inflated the values of assets held by Icahn Enterprises L.P. Furthermore, Hindenburg raised doubts about the financial support for IEP’s $2 quarterly cash dividend, suggesting that the investment firm’s cash flow and overall performance might not justify such distributions. These accusations sent shockwaves through the market, and the share prices of Icahn Enterprises L.P. experienced a significant decline.
In response to the allegations, Icahn Enterprises L.P. submitted a regulatory filing. The filing stated that IEP had reached a three-year agreement with the banks, amending and restating previous loan agreements with these lenders. This new deal consolidates all of Mr. Icahn’s borrowings. The filing further disclosed the terms of the agreement, shedding light on the steps that Icahn has agreed to take.
Terms of the Agreement
According to the regulatory filing, Carl Icahn will initiate the agreement by making an initial principal payment of $500 million on or before September 1. This substantial payment demonstrates Icahn’s commitment to resolving the concerns raised by Hindenburg Research. In addition, the agreement includes quarterly principal payments of $87.5 million, commencing on September 1, 2024. Finally, the agreement will conclude with a final principal payment of $2.5 billion.
Positive Market Reaction
Following the announcement of the agreement, Icahn Enterprises L.P. witnessed a remarkable surge in its share prices. The stock gained approximately 20% during intraday trading, marking a significant rebound from the decline it experienced after the Hindenburg report was released. Despite the gains, it is important to note that the company’s shares have still experienced a loss of one-third of their value since the beginning of this year.