OTTAWA -- Embattled Canadian software developer Corel said late Thursday it had secured a much-needed financial lifeline, adding CAN$15 million in a bought deal financing agreement, with an option for an additional $15 million.
Corel said after a trading halt that it had struck the deal with Canaccord Capital, which includes an option for an additional $7.5 million at Canaccord's discretion.
By mutual agreement, Corel and Canaccord can add another $7.5 million to the deal. The number of shares and the price will be determined based on an amount equal to 90 percent of the average closing price of Corel common stock on the Toronto Stock Exchange in the next four trading days.
"It's the first step in our comprehensive plan," Corel chief financial officer John Blaine told Reuters. "Our next step will be to concentrate on finalizing our cost savings plan."
Corel did not disclose its cash reserves because it is in a quiet period in advance of its quarter closing May 31, but insisted it can meet its financial obligations.
"We're very comfortable we will continue to meet our obligations," Blaine said, adding that Corel reviewed between six to eight financing options. "This is the only equity financing we're pursuing."
Ottawa-based Corel, which expects to lose money for the next two quarters, had faced a cash crunch with the death of its bid for California's Inprise/Borland Corp. May 16. Corel said at that time it was evaluating financing options and also planned to cut $40 million in annual expenses.
Corel, best known for its word-processing and graphics software until last year's push into the Linux market, warned it could run out of cash by July if the Inprise/Borland merger failed or it didn't find financing.
The merger's collapse withdrew Inprise/Borland's US$240 million cash reserves from Corel's reach and nixed a US$29.5 million termination fee.
