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.