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.
Alchemy bids for Cedar
The UK turnaround specialist has confirmed its intention to rescue software company Cedar Group, a week after the former high flyer warned of bankruptcy.