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SJ Mercury/Reuters: Corel strikes much-needed financing deal

Sep 19, 2000, 17:14 (1 Talkback[s])

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"Software developer Corel Corp. said Tuesday it has struck a complex share purchase deal that would add $56 million in much-needed cash to its coffers if exercised today. Corel, facing slumping sales and the recent resignation of high-profile chief executive Michael Cowpland, said that under the deal it can sell up to 14.7 million shares in draw down periods over 24 months to an unnamed institutional investor."

"This is an uncommon, but not unique, style of structure. Most companies don't need to do this," said Duncan Stewart, fund manager at Tera Capital Corp., who does not presently hold any Corel stock but has in the past. "Corel is a company that is in less robust health than your average high-tech company and therefore they have to do something that is a little bit unusual -- there's nothing illegal, there's nothing fishy, there's nothing suspicious."

"Ottawa-based Corel said the investor is entitled to buy shares at 95 per cent of the average daily price during certain periods, provided that price exceeds a threshold price set by Corel. Corel said it may also enter into other types of financing transactions that are not based on an equity line structure."

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