Alchemy bids for Cedar

Alchemy Partners, the turnaround financier, has confirmed plans to buy Cedar Group, the ailing UK software maker, in a £3.8m (E6.23m) transaction.

Alchemy said today that Redac Limited, a wholly owned subsidiary, made a 5p-per-share offer for the company, which just over a week ago had warned it would file for bankruptcy if it couldn’t find a buyer. The bid, led by Alchemy's Martin Bolland, represents a 56 per cent premium over Cedar’s closing share price on December 27. Last march, the business had been valued at almost £1bn.

Provided the offer was declared unconditional, Alchemy would inject an additional £14m of funding into the business, the private equity firm said. Another £5m would come from Halifax Bank of Scotland, Cedar’s main creditor, which according to the Financial Times has also agreed to write off £20.4m of £38m of outstanding debt by the selling it for £1. Alchemy and HBOS have already made available £5m of emergency funding for Cedar.

Cedar’s difficulty, which last year bought Enterprise Solutions for $72m, began in September when it issued a profit warning. It has already cut 320 jobs, with just over 1,000 employees remaining. The business is thought to have strong cashflow and a significant order book.

Cedar is advised by Durlacher. KPMG Transaction Services is advising Alchemy.