Billionaire investor Carl Icahn on Wednesday said he signed an agreement with power company Dynegy Inc that would allow him to buy up to 19.99999 percent of the company while retaining his voting rights.

Dynegy's shareholders recently rejected a $665 million buyout deal floated by Icahn. That $5.50-a-share bid came under fire from hedge fund Seneca Inc, Dynegy's second-largest shareholder, which believes the company has more value.

According to a filing with the Securities and Exchange Commission, Icahn and Dynegy agreed to a waiver of section 203 of Delaware's corporate law, which would otherwise prevent Icahn from voting his shares in favor of any new deal he puts together for Dynegy for a three year period.

Icahn has suggested he is willing to provide the company with debt or equity financing.

Dynegy shares fell 3 percent on Wednesday as investors shrugged off a warning that the power company could seek bankruptcy protection if it is unable to amend or replace its existing loan facility.

(Reporting by Michael Erman; Editing by Bernard Orr)