Carl Icahn has suggested through his accumulation of 9.45% of The Greenbrier Companies (GBX) a merger of the company and his 57% controlled American Railcar Industries (ARII)
From this mornings SEC filing:
“From January 8, 2008 to January 25, 2008, Longtrain purchased an aggregate of 1,530,000 Shares in the open market for $27,857,348. The source of funding for the purchase of these shares was the general working capital of ARI and Longtrain.”
American Railcar is the sole shareholder of “Longtrain” and Icahn hold 57% of ARII shares.
“The Reporting Persons acquired their positions in their Shares in the belief that they are undervalued. On February 1, 2008, Representatives of the Reporting Persons notified the Chief Executive Officer of the Issuer that the Reporting Persons acquired the Shares and that the Reporting Persons are interested in having discussions with the Issuer about a possible business combination of the Issuer and ARI (American Railcar). The Reporting Persons made no offer to the Issuer nor did they suggest that an offer would be forthcoming or, if forthcoming, when that would take place, what the structure of the offer would be, or what would be the value thereof. “
Like Pershing’s Bill Ackman’s strategy in Borders (BGP) and Leucadia’s (LUK) in American Credit (ACF), Icahn is using Total Return Swaps to enhance his interest.
From the filing:
“The Reporting Persons have entered into a number of derivative agreements, commonly known as Total Return Swaps, with counterparties, which agreementsprovide that the profit to the Reporting Persons shall be based upon the increase in value of the Shares and the loss to the Reporting Persons shall be based upon the decrease in the value of the Shares, during the period from inception of the applicable agreement to its termination. The agreements provide that they settle in cash. In addition to the Shares which they beneficially own as shown in Item 5 above, the Reporting Persons currently have long economic exposure to an aggregate of 400,000 Shares through such agreements.”
Disclosure (“none” means no position):None
