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VNU Net: Cash boost for struggling CorelMay 26, 2000, 19:38 (0 Talkback[s])
(Other stories by Ian Lynch)
By Ian Lynch, VNU Net
Troubled Canadian software developer Corel has secured some much needed cash by agreeing to sell equity worth C$15m (£5m) to investment firm Canaccord Capital.
Corel will sell equity at a price to be determined based on an amount equal to 90 per cent of the average closing price of the company's common stock on the Toronto Stock Exchange in the next four trading days.
Canaccord can add another C$7.5m at its discretion, while a further C$7.5m can be included in the deal by mutual agreement - making C$30m in all.
Corel, which expects to lose around $24m over the next six months, had faced a cash crisis after a planned $1bn merger to create a Linux powerhouse with Inprise/Borland was cancelled on 16 May - taking Inprise/Borland's $240m cash reserves out of Corel's reach.
Earlier this month, the firm said that if the merger didn't go ahead, it could run out of cash in three to four months. But when the merger with Inprise/Borland was shelved, Corel said it still had cash in the bank, was evaluating financing options and was devising cost-cutting plans to save $40m annually after.
Meanwhile, two of Corel's senior management team have resigned. Sandra Gibson, executive vice president of corporate services, and Eric Smith, vice president, general counsel and secretary have resigned.
Corel chief executive Michael Cowpland wished the pair well and said the departures are not related to any performance or financial-related issues.
Gibson, with Corel since 1990, originally gave her notice in April 2000 and agreed to remain at Corel to assist in the preparation of the $40m cost-savings plan. Smith joined Corel in 1996 and led Corel's legal team. He is yet to make a statement about his future plans. Both resignations come into effect next month.
"Both have been valuable members of Corel's senior management team. Their contributions over the years have helped to build a strong foundation for the company," said Cowpland.
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