In an SEC filing today, an entity controlled by Carl Icahn announced that it has purchased another 17.5M shares of the common stock of XO Holdings (news, filings). It was a private transaction at $0.60 per share, roughly at which the stock was trading yesterday when it occurred. That’s well below the last price Icahn offered to buy the company at last year. 17.5M shares is rather close to the last reported holdings of R2 Investments, which has been locked in several parallel legal tussles with Icahn – one of which includes XO. If those shares came from R2, then there could have been a settlement of some sort. But actually, the seller is probably Diamondback Master Fund, whose last reported holdings were 17.2M shares – I don’t know of any other holders of this size.
Icahn now controls 91.26% of the voting rights, which means he can pretty much do what he likes unless a court tells him otherwise. But one thing is for sure, XO needs to raise money to fund its current expansion plans. They have regularly stated their dislike of taking on debt, but they seem to have few other choices. Icahn’s move could foretell a break in the logjam that has been holding that up. Is he about to make a move on the rest of the company? Or is he just digging in deeper to wait out the shareholder lawsuits?
Some wonder why I spend as much time as I do watching XO’s travails. There are several reasons. First, as chunks of telecom go, XO is quite large and has some very nice assets. If it finally goes on the market or gets the right kind of funding and leadership then the balance of power could shift rather quickly and unpredictably amongst competitive telecoms and it would a good idea to be prepared. Second, there are about 4000 people employed at XO that have endured the better part of a decade of this soap opera, not to mention some very vocal and colorful investors – they deserve a voice. And third, well, it’s Carl Icahn and he always keeps things interesting.
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