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Canwest News Service
OTTAWA – The San Francisco private equity investor that controls Corel Corp. said Thursday it has won the battle to take the struggling Ottawa company private.
But the margin is close and the contest may not be over yet. A Texas software magnate, who is opposing the bid, said in a regulatory filing late Wednesday that he controls more than half the Corel stock in contention.
Vector Capital said that it bought 4.54 million shares at the $4 US offering price at a deadline of midnight Wednesday.
It said the holding represents 52 per cent of the stock in contention. It now plans to extend the offer until Dec. 4 and then use powers in securities laws to buy up the rest.
The total buyout will cost Vector $34.7 million US.
ESW Capital, a Texas company led by an Austin software magnate Joseph Liemandt, started buying Corel stock on the open market last month and augmented it with a deal for more than two million shares at $4.75 each.
Vector already controls 68 per cent of Corel stock. It said it needs to take Corel private in order to deal with pressing financial issues triggered by the recession, including falling sales and rising losses.
It warned that Corel was in danger of breaching conditions on its debt and will likely require additional financing next spring.
This week, it said that Corel had lost a major customer, which would have hurt digital media product sales for quarters.
But some investors were unhappy with the offer because they had bought the shares at $16 when Vector took Corel public. Vector tried to get investors to accept an $11 buyout offer to take Corel private a year ago.
Independent directors on the Corel board initially sat on the sidelines when Vector offered $3.50 per share but joined a unanimous board recommendation in favour when the offer was raised to $4.
Ottawa Citizen
