Corel Corporation $30 Million Share Financing

On June 28, 2000, software developer Corel Corporation closed its sale of 7,299,270 common shares to Vancouver’s Canaccord Capital Corporation for proceeds of $30 million, pursuant to an unusual ‘bought deal’ arrangement. The price of $4.11 per share was determined based on 95 per cent of the four-day average closing price of the shares on the Toronto Stock Exchange, following the date of the announcement of the transaction in late May.

The terms of the agreement provided that Corel would have a period within which to qualify the common shares offered pursuant to the prospectus. As the qualification did not occur within the deadline, Corel has issued a half warrant for each share purchased. One whole warrant entitles the purchaser to buy an additional share at $4.56 within 12 months. Corel has announced that the company will issue an additional 3.6 million shares if all the warrants are exercised, potentially raising another $16.6 million for Corel.

The unique bought deal structure provided Corel with certainty as to the financing while providing investors with certain protection on the stock price. The cash infusion will be used toward Corel’s operating cash requirements, cost-reduction plan costs and working capital.

Underwriters Canaccord Capital Corp. were represented by Peter Marrone, Mindy Gilbert and André Boivin of Cassels Brock & Blackwell LLP. Acting for Corel Corporation were Robert D. Chapman, Virginia Schweitzer and Debra Henke from the Ottawa Office of McCarthy Tétrault, and Arnold Peinado and Evelyn Lim of Milbank, Tweed Hadley & McCloy LLP.