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Peregrine gets $50m loan, sells e-commerce ops
Is it enough?
Peregrine Systems Inc's new CEO Gary Greenfield has moved swiftly to try to stabilize the company by negotiating a $50m loan and agreeing to sell off its e-commerce operations. Ableco Finance LLC will provide finance for the scandal-engulfed company with a secured loan that has to be paid off next year.
At the same time, Peregrine is selling off what it describes as its supply chain enablement business for an undisclosed sum to Golden Gate Capital LLC in a deal expected to close later this month.
Peregrine is at the center of an accounting scandal after auditors KPMG uncovered revenue recognition irregularities involving as much as $100m, which led to the resignations of its CEO and CFO. The US Securities and Exchange Commission is investigating the situation, which escalated when KPMG claimed it had uncovered side agreements and "possible fraud" at the San Diego, California-based company.
The e-commerce operations, Harbinger Corp and Extricity Inc, which produced just $120m combined revenue last year, were due to be spun out by the previous management in an acknowledgement that the company's acquisition spree had taken it far beyond its roots in infrastructure management. Harbinger was bought for $2.1bn in stock in April 2000, and Extricity for $168m in March 2001, but neither is likely to bring in more than a tiny proportion of its purchase price.
Greenfield has good relations with Golden Gate, and in his previous role as CEO of Merant Plc, he sold its Micro Focus Cobol tools business to the company for $62.5m. A far bigger task now faces him in finding a buyer for Remedy Corp, the Mountain View, California-based CRM vendor Peregrine brought for $1.09bn in stock and cash almost a year ago. A sale of Remedy became an inevitability when Peregrine announced earlier this month that it would be operated as an independent unit managed by Larry Garlick, who was its co-founder, chairman and CEO.