Sapiens International (SPNS) - Get Report, still smarting from the demise of its planned merger with Tel Aviv-based Ness Technologies, today secured $15 million from Formula Systems (FORTY) - Get Report and the Israeli venture capital fund Magnum in exchange for convertible debentures.
Formula and Magnum can convert the bonds into Sapiens stock for $1.50 each. Sapiens stock today broke the $1 barrier on the upside, giving it a market cap of only $20 million or so.
Sapiens, which provides e-businesses software, has had a hard year. Revenue slumped from the beginning and profits disappeared altogether. Then its merger with Ness, which would have created the biggest software house in Israel, was cancelled, partly because of Sapiens' performance. Poor third-quarter results shot down its stock from $22 a share to a low of 72 cents on Dec. 20.
If Formula and Magnum convert all the bonds they are receiving into stock, they will together hold 33% of Sapiens' equity.
Sapiens CEO Yitzhak Sharir says the $15 million will be used to extract the company from the mire. He replaced Dan Falk in late November.
He believes that one of Sapiens' worst problems is that it put too much effort into the planned merger rather than concentrating on revenue vs. costs. He added that next year the company would focus on a new business plan and shifting back to operating profit.
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