FRAMINGHAM (04/21/2000) - A spokesman for Inprise/Borland Corp. today said its merger with Corel Corp. was on schedule despite a pending lawsuit, and she downplayed a financial filing by the Canadian software maker that it might run out of cash in 90 days.
Marilee Adams, vice president of corporate communications at Inprise, said Ottawa-based Corel's 10-Q filing with the U.S. Securities and Exchange Commission (SEC) needs to be seen in its proper context. The 10-Q simply represents the worst-case scenario as required by the SEC.
She also characterized a suit brought by a former member of Inprise's board of directors trying to block the merger as "frivolous."
Corel recently posted a first-quarter loss of US$12.4 million, and in its 10-Q quarterly financial filing of April 19, the company said it expected to post more losses over the next six months. Corel was closed today for the Good Friday holiday.
"If the proposed merger with Inprise does not occur, other sources of financing are not secured and/or Corel's operating results do not improve, a cash deficiency may occur within the next three months," the company's 10-Q statement read.
However, Adams at Inprise/Borland said that "You have to state every single risk... and effectively cover anything that might happen." She added that Corel's statements did not mean the merger was in danger or that Corel would actually run out of cash.
"We are moving forward on the merger. A vote on our side is scheduled for mid to late June," Adams said.
Corel shareholders are scheduled to vote on the merger later in the summer.
Under the terms of the agreement, Inprise would become a wholly owned subsidiary of Corel. The companies originally said the deal was worth $2.4 billion in February, but observers now estimate it is worth about $1.1 billion because share prices for both companies have fallen in the past few months.
Corel's stock closed yesterday at $7.94 per share. Inprise's stock closed yesterday at $5.50 per share. Both companies hit their 52-week highs in mid-December, Corel at $44.50 and Inprise at $20.
Following the announcement of the merger in February, C. Robert Coates, president and chief executive officer of Dallas-based Management Insights Inc., resigned from Inprise's board of directors protesting the pact.
On April 18, Coates filed suit against Inprise, Corel and their directors in the Delaware Court of Chancery charging that a merger plan to convert each share of Inprise stock to a 0.747 share of Corel was unfair. According to a statement released by Inprise last year, Coates owns about 6 percent of the company's stock.
"We think the suit is frivolous and completely without merit," Adams said. "Mr.
Coates supported the agreement up until the night before it was announced when he resigned without giving any reason."
Attempts to reach Coates in his Texas offices were unsuccessful.
This is the second time that Coates has sued Inprise. He was elected to Inprise's board of directors last June after he filed suit against the company in the same Delaware court "challenging the validity of certain policies and procedures recently adopted by the Board," according to an Inprise statement released at the time. Following his election, Coates dropped his suit against the company.
When Coates dropped the suit, the company issued a statement from its interim President and CEO Dale Fuller saying: "Moving forward, we hope that Mr. Coates will work constructively with the other board members in their efforts to enhance shareholder value."