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XO Shareholder R2 Steaming Mad at Icahn

Hedge fund R2 Investments once again has Carl Icahn in its sights, claiming the activist investor has hurt XO Holdings Inc.’s minority shareholders, including R2.

According to the Wall Street Journal, R2 accuses Icahn – XO director and majority shareholder – of spurning three purchase offers that would have boosted XO’s stock price. After that, Icahn instructed XO to issue $780 million in preferred shares to refinance the company’s heavy debt load. Icahn then bought those shares, raising his stake in the company to 80 percent.

Reports say this lets Icahn use XO’s losses as a tax shield for the other businesses he owns. So, while he gets a cushion, XO shareholders – who could’ve been paid $2.25 per share – watched their investments fall to 12 cents apiece. Then, last month, Icahn proffered his 55-cent-per-share buyout, an offer R2 is refusing.

Icahn isn’t acting illegally, according to reports, so it’s unclear how much headway R2 will make.


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