Feeds

Corel warns of cash-flow crises if Inprise merger fails

'May occur' is not the same thing as 'will occur'

  • alert
  • submit to reddit

Top 5 reasons to deploy VMware with Tegile

Corel admits it could run out of cash within 90 days. The company told the Canadian Securities and Exchange Commission on Friday that unless its planned merger with Inprise/Borland goes ahead, its financial results fail to improve or other sources of finance are not secured, "a cash deficiency may occur within the next three months". Corel's statement isn't likely to encourage investors, and with a major boost to its revenue not too probable either - Corel has already warned shareholders that it will post a loss this quarter, having done so last time, too - the company is clearly pinning its hopes on the Inprise merger going ahead. However, the key word in Corel's statement is 'may' - not, you'll note, 'will'. The company has set up a scenario - the Inprise merger is called off - and highlighted a possible outcome, but as the company' cautious language suggests, it's not the only possible outcome. That suggests there's some spin going on here. Cash-flow crises are not normally events companies want to discuss, but Corel seems to have been remarkably open about it. The problem for Corel is that a vociferous number of Inprise shareholders are radically opposed to the merger. Since the deal was announced - and largely thanks to Corel's poor financial performance - the value of Corel stock Inprise shareholders will get if the merger goes ahead have fallen dramatically. The merger was to have been worth around $1.1 billion, but now its less than half that figure. Inprise shareholders want the merger terms renegotiated. Corel isn't keen to do so. Corel stands to win not only Inprise's product line but a $197 million pot of cash if the merger goes ahead, and with its current financial committments - which include $5.19 million in payments to shareholders who sued the company over a previous share price fall back in 1997 - it certainly needs the money. Six months ago, the company was winning sales of $71.3 million, since then its sales have fallen 38 per cent to $44.1 million, and there's no real sign of a turnaround, not least since its key Linux products can be downloaded for nothing. Shareholders will vote on the merger this summer, assuming it gets that far. Last week, a former Inprise director and major shareholder asked a US court to block it. Of course, if the merger fails to complete, Corel could still come out a winner. The terms of agreement between the two companies allow for a $29.5 million penalty payment to Corel, if Inprise pulls out. That said, Corel will have to cough up $44.5 million if it terminates the agreement. ® Related Stories Inprise lawyers seek to block opposition to Corel merger Corel Q1 disappoints

Internet Security Threat Report 2014

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
DOUBLE BONK: Testy fanbois catch Apple Pay picking pockets
Users wail as tapcash transactions are duplicated
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
In the next four weeks, 100 people will decide the future of the web
While America tucks into Thanksgiving turkey, the world will be taking over the net
Microsoft EU warns: If you have ties to the US, Feds can get your data
European corps can't afford to get complacent while American Big Biz battles Uncle Sam
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.