This article is more than 1 year old

Corel wins financial lifeline

Belt tightening process may ease somewhat...

Struggling Corel has obtained some equity financing from an anonymous institutional investor who clearly must have confidence that the share price will go up.

Corel shares closed at US$3.6875 last night, which makes the potential funding worth some $54 million over 24 months if all 14,690,000 shares had been taken up at yesterday's price. In practice, the investor will take tranches based on the weighted average share price over a period. Corel will be allowed to set a minimum price.

There are some stringent conditions of course, one of which is that bad news will not be tolerated by the investor. The effect of the deal will be to give Corel a line of credit as needed.

Corel certainly moved fast to obtain this support, since it is only two weeks since the cost-restructuring plan to save $40 million was announced - $18 million came from salaries, $12 million from advertising, $5 million each from product-related savings and general administration. In May, Corel raised $20 million from Canaccord for selling it stock at a ten per cent discount.

Corel says that the next step will be to realign its organisational structure, and it expects to make an announcement about this by the end of the month. Corel has already announced that by November its Dublin operation will be reduced by 130 people, leaving a skeleton staff.

Yesterday, Corel indicated it may pursue investments in future products, but whether this implies stakes in other ventures is unclear at present. It remains to be seen whether Corel will continue with is graphics, Linux and WordPerfect product lines, or seek to sell some of its assets.

Corel's quarterly results are expected to be announced on 27 September. ®

More about

TIP US OFF

Send us news


Other stories you might like