WILSONVILLE, OR -- The high stakes poker game over Mentor Graphics gets more interesting by the day.

To wit:

• On Monday, Mentor's board turned down a $1.9 billion offer from its top shareholder, the corporate raider Carl Icahn.
• On Tuesday morning, Mentor then said it would seek a private placement of $220 million in convertible subordinated debentures, funds that would go toward buying a small amount ($25 million) of shares, plus paying off a $18.5 million loan due 2013 and a series of convertible subordinated debentures due in 2026. (A debenture is unsecured bond backed by the issuer's creditworthiness; because it is convertible, the bond could be turned into company stock, thus diluting the value of the stock held by existing shareholders.)
• A few hours later, Icahn, who holds 14.7% of Mentor's shares, publicly lambasted the electronics design automation company. In a letter to the Mentor board that he then publicly released, Icahn blasted the moves, saying that they would add debt and make the company a less attractive target for buyers. He also singled out company chairman Wally Rhines as a laissez-faire head of a "country club" enterprise.
• On Tuesday night, Icahn offered Mentor a loan of $220 million in a non-convertible, 30-month note. Because it is non-convertible, such a loan would not be dilutive to shareholders. (Icahn probably had to structure the offer that way, because Mentor has a "poison pill" clause that kicks in if any shareholder acquires control of more than 15% of the company's stock).

As of this writing, Mentor, which develops CAD software for printed circuit board and semiconductor design, had not responded to Icahn's latest move.