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Corel gets cash infusion, execs resign

Canadian software developer Corel Corp. (Nasdaq: CORL) said it has secured a much-needed injection of cash: C$15 million, or about US $9.98 million.

The funding, announced late Thursday, is part of a bought deal financing agreement, with an option for an additional C$15 million which would bring the maximum total to US$19.96 million.

Corel also announced late Thursday the departure of two key executives. President and CEO Dr. Michael Cowpland said Sandra Gibson, executive vice-president, corporate services, and Eric Smith, vice-president, general counsel and secretary have resigned. The departures are not related to any performance or financial-related issues.

Shares closed at 3 27/32 Thursday, a fraction of their 52-week high of 44 1/2. Corel's weak shares and poor first quarter, forced the company to call off a merger with Inprise/Borland. Investors cheered the demise of Corel's proposed acquisition of Inprise/Borland Corp. (Nasdaq: INPR) May 16 by bidding both stocks up. Corel also sparked worries about its cash position.

When Corel dropped its merger with Inprise/Borland, it said it was evaluating financing options and also planned to cut $40 million in annual expenses. The company also warned it could run out of cash by July if the merger failed or it didn't find financing. The deal's collapse withdrew Inprise/Borland's $240 million cash reserves from Corel's reach and called off a $29.5 million termination fee.

Corel said after a trading halt Thursday that it had a deal with Canaccord Capital Corp., which includes an option for an extra C$7.5 million, or US$4.99 million at Canaccord's discretion. 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.

Corel called the move a first step in a comprehensive plan. ``Our next step will be to concentrate on finalizing our cost savings plan,'' CFO John Blaine told Reuters.

Corel did not disclose its cash reserves because it is in a quiet period in advance of its second quarter report. The company insisted it can meet its financial obligations. After reviewing between six to eight financing options, the company has said this is the only equity financing it's pursuing.''

The company, which expects to lose money for the next two quarters, is expected to report a loss of 32 cents a share for its second quarter the week of June 19.

Corel competes with Microsoft (Nasdaq: MSFT) and Adobe (Nasdaq: ADBE). Corel also distributes Linux software, competing with Red Hat (Nasdaq: RHAT) among others.