Icahn Enterprises on the edge of junk, S&P warns

Billionaire Carl Icahn, who last year produced a video warning of the “danger ahead” for the US economy, may need to focus on fixing his own publicly listed company.

Standard & Poor’s warned Friday that the activist investor’s $6.3 billion holding company was in danger of being downgraded to junk after taking a big hit on energy and commodity bets.

The credit ratings firm placed Icahn Enterprises on watch with “negative implications,” adding there is “at least a one-in-two likelihood that we may lower the ratings within the next 90 days.”

Another downgrade of the company, which is rated BBB-, would put it in junk territory.

Icahn Enterprises holds stakes in the activist’s hedge fund investments, including Chesapeake Energy, natural gas exporter Cheniere Energy and copper miner Freeport-McMoRan.

As of June, 44 percent of its adjusted earnings before interest, depreciation and amortization, or Ebitda, was from investments in energy companies, according to an investor presentation.

Icahn, who owns 89 percent of the holding company and is chairman, could raise equity by selling shares and diluting his stake.

“That could improve the firm’s leverage and creditworthiness,” S&P said in its report.

Shares of Icahn Enterprises have tumbled about 50 percent over the past year, along with steep declines in its oil and commodity holdings.

The stock fell another 11 percent Friday, to close at $48.75, on the S&P report.

Icahn Enterprises has $1.175 billion in loans due January 2017, which S&P said it believes the company has the ability to repay.