Takeover specialist Carl C. Icahn, whose $60-per-share bid for Texaco Inc. has met a heavy dose of skepticism on Wall Street, says he will have little problem raising the necesary cash to finance the buyout.
Meeting with securities analysts, who still doubt he can pull the deal off, Icahn said he would have to borrow $8.86 billion to complete his offer, made last week, to buy the 86.2 percent of the company's stock he does not already own for $12.4 billion. The bid put a total value on Texaco's 207 million shares of $14.6 billion.To complete the deal, Icahn said he would sell two subsidiaries - Texaco Canada Inc. and the company's 50 percent interest in Caltex, among other provisions.
He then would borrow against the $2.98 billion cash flow expected to be generated this year to obtain the remainder, Icahn said.
Texaco later scoffed at the plan, calling Icahn's offer "still illusory" and dismissing the details he provided as "sketchy, sloppy and wrong."
Icahn, Texaco's largest shareholder, launched a proxy fight for five of the company's 14 board seats on Friday, after the board rejected his offer.
He said he would have dropped the bid if Texaco had put it to a shareholder vote at the company's annual meeting later this month.
If his five-man slate wins, Icahn said Thursday he is confident he would be able to persuade the board to sanction such a vote.
As far as financing is concerned, "We've had several banks tell us we would have no trouble raising that on the basis that (he takeover would be) on a friendly basis," Icahn said.
On hostile terms, however, "it would be just about impossible" because of certain statutory requirements, he added.
Texaco said in a statement issued from its White Plains, N.Y., headquarters that Icahn's $8.86 billion figure "simply wished away or ignored more than $5 billion in debt.
"Morgan Stanley & Co., our financial advisor, has informed Texaco that Icahn's plan is simply not financable in their opinion," the statement added.
Securities analysts and the stock market have dimissed the offer as a ploy, either to lure other bidders into the ring, or to encourage Texaco's management to buy his shares or help him sell them to a third party.