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Failed Business Sale

Wilmington, DE: (Apr-04-08) R2 Investments LDC brought a lawsuit against billionaire Carl Icahn, Chairman of Icahn's Elk Associates LLC, and XO Holdings Inc. XO, based in Herndon, VA, sells telecommunications services to business customers, including local and long-distance voice, data and Internet access, and has 6,700 miles of fiber-optic cable in 37 US cities.

The suit alleges that Icahn unfairly used his majority stake in the phone company to force the $700 million sale of its Web-access business to Elk Associates LLC., to allow the company to repay debt to another Icahn-related entity. Sources stated that the two parties agreed to resolve the dispute by entering into a settlement agreement.

Under the terms of the deal, Delaware Chancery Judge Leo Strine Jr. granted shareholders' lawyers $8 million to cover legal fees and expenses. Further, as part of the agreement, Icahn agreed to waive certain terms of XO Holdings' original $500 million senior secured term loan through the due date of July 15, 2009, and to reduce interest payments by about $9 million. [DELAWARE ONLINE: XO CAN SETTLE SUIT OVER FAILED SALE OF UNIT]

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Published on Apr-7-08


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