It's been an eventful couple of months for the billionaire activist investor Carl Icahn since a report from Hindenburg Research leveled a number of charges at his investment firm Icahn Enterprises (IEP) -).
At the time of the report, the company's stock tanked, costing Icahn billions, and the U.S. Attorney's Office for the Southern District of New York opened an investigation into the firm's corporate governance, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence and other matters.
But now Icahn is addressing some of the issues Hindenburg raised, and the company's stock is one of Monday's biggest gainers.
After negotiations, Icahn and his lenders have agreed to amend agreements that have tied his personal loans to the trading price of Icahn Enterprises shares, a main risk the short-seller outlined, The Wall Street Journal reported.
Icahn Enterprises shares at last check were up 17%, but the stock is still down more than 40% since the Hindenburg report's release.
Icahn also is increasing his collateral and has set up a plan to fully repay the loans in three years.
The new loan agreements take direct pressure off of the company's stock as the only way a margin call can be triggered is through movement in the net asset value of IEP's investments, according to the Journal.
Previously, about 60% of IEP shares were pledged as collateral for personal loans for Icahn.
Hindenburg's report said that the dividends IEP pays out were "mathematically unsustainable." It said that $1.5 billion in cash dividends had been paid since 2014 despite negative free cash flow of $4.9 billion during that period.
"In short, Icahn has been using money from new investors to pay out dividends to old investors," the Hindenburg note stated.
