Corel users, shareholders fight Vector Capital takeover

A group of Corel users and shareholders who set up a Web site called last month claim the company is pulling the rug out beneath them.


Corel is currently entertaining a US$1.05 a share buyout from San Francisco firm Vector Capital. Corel will hold a shareholder meeting to determine the outcome of the bid on Aug. 20. participants claim the timing of the meeting is suspicious since many shareholders will be on vacation and that Vector Capital’s offer is seriously undervalued.

“”Most of us are not very happy with the way this has gone because a lot of us are longtime investors,”” said Robert Alexander, who uses Corel products in his Markham Trophy Inc. company, based in Markham, Ont. He is also a shareholder and one of the roughly half-dozen people behind

“”We feel that Corel is at the point of turning around. We’ve been waiting for this, we’ve been promised this, we can actually see the possibilities that are coming. Obviously, Vector can see ito to or they wouldn’t be buying it,”” he added.

An unofficial poll featured on states that seven million shares have been submitted against the bid. Alexander, who ran the poll, said he appreciates the support, but it’s not nearly enough to overturn the final vote. The Web site also features quotes from former Corel chief executive Michael Cowpland, dismissing the Vector offer as “”pathetic.”” Cowpland could not be reached for comment, but a spokesperson from his company ZIM Technologies characterized the quotes as accurate.

Alexander also criticized Corel’s management, claiming that the company would be on safer ground financially if it got its marketing and product distribution in order.

“”We feel that management could have better served the shareholders and the company by being a little more active in the marketing. . . . You can go to the stores and you won’t find Corel stuff on the shelves. Well, whose fault is that?””

Charles Golden, a participant who says he currently owns 60,000 Corel shares, also said he has had trouble finding Corel products on store shelves in the Akron, Ohio, area, where he currently resides.

The news came as a surprise to Corel spokesperson Anne Vis, who said the company released six Corel products into the retail market last month. “”The retail channel is extremely important for the company,”” she said.

Golden said he has never done business with Corel, but has followed the company avidly as a shareholder and has spoken with the company’s CEO Derek Burney. “”We think the price is unfair and the timing is terrible,”” he said. “”I consider myself a friend of Derek Burney and on this issue we agree to disagree. This is so damn illogical. . . . They have worked hard in the last two years to reduce debt to nothing.””

Corel will mail out an information circular at the end of the month to shareholders supplying details about the upcoming vote. Vis wouldn’t address concerns about Corel’s conduct in negotiations with Vector and the timing of the offer itself other than to say, “”We have made our position very clear.””

She added that shareholders will be given the opportunity to vote in person at the meeting, online or over the phone. The offer will require two-thirds of votes cast in order to be carried out, she said. If the bid is successful, Corel shareholders can turn over their shares to Vector for US$1.05. Those who don’t will have the proceeds of the transaction held in escrow. Alexander said he will be unable to attend since he will be on vacation.

Financial analyst Duncan Stewart, with Toronto-based Tera Capital Corp., said that Vector’s offer is “”low-ball,”” but saw nothing wrong with the timing of the shareholder meeting. “”Give me a break. If you’re a shareholder and you’re not opening your mail . . .””

He added that Corel may be able to become profitable, but that ultimately the company was a lost cause. “”My best guess is, Corel’s revenue is going to continue to erode. Yes, you could turn it into a profitable company, but it would be a profitable company with a five-year life.””

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