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In a post last month about XO, I asked what Carl Icahn wants , given that he has been negotiating with himself over the future of the company.  Well, yesterday what was already a bad situation got worse - Icahn may own a majority of the bonds, preferred, and common stock, but he doesn’t own it all and the other shareholders are pissed.  One of the largest minority shareholders in XO, Amalgamated Gadget, accused Icahn of abusing his majority status and publicly called for his resignation from the board.

Well, I think it goes without saying that the chance Icahn will actually bow his head and walk away is just slightly beneath the chance the sun won’t rise tomorrow.  So what does Amalgamated hope to accomplish with this letter?  XO needs to refinance its debt, and Icahn holds all the cards - Amalgamated is going to do they only thing they can do, which is make noise.  Maybe if they get lucky, Icahn will give in and just extend the maturity of the debt to avoid a fight.  Icahn is of course in the midst of a tussle with Yahoo and might want to make them go away.

Someday, somehow, someone will buy XO and end this whole sorry chapter of telecom history.  Ah, now there’s a thought though!  Now that mud is flying in public, maybe some company out there that has been rebuffed in the past could come out and make a *public* offer for XO that takes a middle position.  Let both sides save face by not losing to the other, and let these assets go somewhere they can finally live up to their potential.  If they find a way to let the NOLs go to Icahn in the process, it might even work… Now may be the time to strike!