Beleaguered software company Computer Associates International Inc. (CA) has enough money to cover its short-term debts, it said late last Thursday.
The company issued a strongly worded statement in response to a report published earlier Thursday by the Bloomberg news agency that alleged CA had been forced to draw on its line of credit in order to repay its short-term debts.
"Contrary to a Bloomberg news report filed today, Computer Associates has not drawn on its credit lines to pay down its commercial paper obligations. CA's outstanding commercial paper obligations can be covered by cash on hand as well as cash generated from operations and the Company has sufficient cash flow to fund its daily operations," CA said.
It was the second time in a week that CA moved quickly to deny a media report concerning its business practices.
On Wednesday, CA said it was not aware of any federal investigation into its accounting practices, despite a report published earlier the same day in the newspaper Newsday. According to the report, the U.S. Federal Bureau of Investigation (FBI) and U.S. attorney's office have launched a preliminary investigation into whether CA's accounting practices violate federal criminal fraud laws.
That story was followed with a similar story later the same day in The New York Times newspaper which, like Newsday, cited sources close to the investigation.
Despite CA's assurances that it didn't believe it was under any investigation, shareholders sent the company's stock into a dive. It ended Wednesday down more than 17 percent on the New York Stock Exchange.
According to the report by Bloomberg, CA was forced to cancel a US$1 billion debt sale while borrowing $1.4 billion of $3 billion in credit lines arranged by Credit Suisse First Boston in order to pay back short-term debts. The report quoted CA's chief financial officer Ira Zar as its source for the story.
Responding directly to the Bloomberg story, CA denied the claims, stating that it "had drawn from one of its credit lines to replace another credit line, with no net increase in total debt. The decision to move funds between credit lines was a function of the anticipated close of the financing that had been scheduled to close on Feb. 6," CA said in the statement.
CA said that by the end of this month it expects have a debt load that is $400 million less than it had at the end of last year. The company said its anticipated debt total was $3.2 billion.
CA stock again closed lower for the day on Thursday, having fallen $2.01 per share, or 9.61 percent to end the day at $18.90. In the last year, the value of CA's stock has experienced a high of $38.74 per share and Wednesday's 52-week low of $18.69.