UPDATED: Activist investor Carl Icahn is not satisfied with the recent changes at Navistar International Corp., especially since they were made without input from him and three other major investors. In an open letter to the Navistar board of directors, he urged them to offer four seats to shareholders immediately, and threatened a fight if they don't.
Navistar will roll out EPA-2010-compliant Cummins engines with SCR aftertreatment starting with the ProStar+ in January, but it's not enough for activist investor Icahn.
Navistar will roll out EPA-2010-compliant Cummins engines with SCR aftertreatment starting with the ProStar+ in January, but it's not enough for activist investor Icahn.

The billionaire, who owns nearly 15% of the outstanding stock in the company, late Sunday issued an open letter to the Navistar board of directors to express "grave concern about the future of Navistar, a company that, in my opinion, has become a poster child for abysmal business decisions and poor corporate governance."

Pointing out that he and three other shareholders hold almost 60% of the stock, Icahn said it was it "outrageous" that the board had not reached out to those major stockholders, "the true owners of this company," on issues such as choosing a new management team. He urged the board to "permit the voices of shareholders to be heard directly at the board level by making four board seats available to shareholders immediately."

"I would prefer to amicably resolve this matter now, rather than through protracted litigation and a proxy fight," Icahn wrote. "However, I am sure that you have no doubt that I will proceed with both, if necessary, to protect my investment and the interest of all shareholders."

As Navistar has struggled over the past few years to develop its own engine that would meet EPA 2010 emissions standards without selective catalytic reduction aftertreatment, Navistar's stock price has fallen from almost $60 per share at the beginning of 2011 to under $25 per share, Icahn said.

In July, Navistar announced it was working on finalizing an agreement with Cummins to supply both the ISX 15 engine and Cummins Emissions Solutions SCR aftertreatment system to create an EPA-2010 compliant solution to be available as early as January. Navistar's stock rose after the announcement.

However, Icahn slammed the recent choice of Lewis Campbell as chairman and interim CEO, saying Campbell has "zero experience in the heavy truck industry and a questionable track record as CEO of Textron. At Textron, over an 11-year period, Mr. Campbell watched Textron stock go from over $37 per share to $20 per share," he said in the letter.

Navistar issued the following statement in response to Icahn's letter:

"The Navistar Board takes its fiduciary duties very seriously and is committed to acting in the best interest of the company and all of its shareholders. Navistar has recently taken a number of important actions, including appointing new leadership, defining and beginning to implement a new clean engine solution, accelerating cost reduction actions, and undertaking a review of its non-core businesses, all with the goal of driving long-term profitability and delivering shareholder value.

"Navistar maintains an ongoing dialogue with its shareholders, and appreciates their input and views. As such, after a year of dialogue, we are extremely disappointed that Mr. Icahn has chosen to pursue his unproductive tactics of threats, attacks, and disruption rather than continuing constructive engagement, particularly at this important time for Navistar. Rest assured, the board and management have a clear path forward and are focused on executing on their plan and delivering value to shareholders."

Updated 8:50 a.m. EDT 9/10 to add Navistar's response.

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