Peregrine Systems borrows $50 million

Troubled software vendor Peregrine Systems Inc. is selling its supply chain enablement business and has obtained a US$50 million loan as it continues to cope with an internal investigation into alleged accounting irregularities.

In a statement yesterday, company CEO Gary Greenfield said the loan "represents one step in our ongoing efforts to improve Peregrine's financial position," while selling the supply chain unit will help the company sharpen its focus on its core business of infrastructure management.

The San Diego-based company couldn't be reached for comment early today.

Peregrine is selling the supply chain enablement business to San Francisco-based Golden Gate Capital LLC, with completion of the transaction scheduled for later this month. The company had announced its intention to sell the unit earlier this year as part of its effort to refocus its business.

The $50 million loan is being provided through Foothill Capital Corp., by Ableco Finance LLC.

The news is the latest in what has been a difficult period for the software maker. Last month, it announced that an independent financial audit was being conducted to look into alleged revenue accounting irregularities involving as much as $100 million since 2000 (see story). At the time, the company also announced the resignations of CEO and Chairman Steve Gardner and Matt Gless, the chief financial officer and executive vice president of finance.

The audit was being conducted by KPMG International LLP on behalf of the company's board of directors. KPMG had been hired in April to replace troubled accounting firm Arthur Andersen LLP. Late last month, Peregrine again changed auditors, firing KPMG after the auditing firm notified Peregrine that approximately $35 million of the questionable transactions being investigated were with KPMG and KPMG Consulting. PricewaterhouseCoopers LLP has since been hired to continue and complete the internal investigation previously begun by KPMG, while Peregrine is conducting a search for new independent auditors, according to the company.

Peregrine, established in 1981, had about 3,450 employees as of March 31. The company makes and sells infrastructure management software, including infrastructure resource planning products.

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