Corel Says Takeover Needed To Prevent Collapse
OTTAWA (AP) ¿ Corel Corp., the maker of WordPerfect and other software, on Monday justified an offer to take the company private, saying that complete ownership is necessary to inject capital quickly and avert a default on its loans.
In an amended filing with the Securities and Exchange Commission, Corel said that its majority investor, Vector Capital, is moving to acquire the 32 percent of shares it doesn't already own to prevent a credit default by Nov. 30.
The company is required to keep its total debt level below 2.75 times its trailing 12-month earnings before interest, taxes, depreciation and amortization, but it expects to fail that test this month.
It can prepay $15 million in principal, dropping its debt ratio to 2.64, but that would result in cash on hand falling to $8.6 million, below what it considers sufficient working capital to support the business.Vector Capital also said it is unwilling to see existing shareholders' stakes diluted, which would happen if an equity investment was sought from outside parties. "Vector believes that if it is going to commit new equity financing to the company using funds from its limited partners under present circumstances, it will need the operational and strategic control of the company that can only come with total ownership in order to safeguard that investment," Corel said in the filing.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV