Struggling Dutch ERP software vendor Baan Co NV has expanded its financing agreement with US investment house Fletcher International Ltd to provide up to an additional $200m in equity funding for the company. Last January, Fletcher pledged to provide up to $225m in equity funding for Baan and the latest commitment ups that total to $425m. Of that, Baan has exercised $100m and intends to take another $110m this month, leaving it with $215m available.
Baan says that, while it market remains uncertain, the new financing will enable it to continue its ongoing investments in new products and fund its recently-announced shift to a subscription-based sales model. The company has posted net losses for five quarters in a row amid a general slowdown in the ERP software market, including a loss of $24.6m in its recently- reported third quarter on revenue that dropped 26% to $142.8m.
All of the cash taken from Fletcher will be in exchange for the right to receive Baan common shares within a three-year period, with the number of shares and the price determined by future stock price movement. In any event, Baan says, the exercise price for the shares for the $225m under the original agreement cannot exceed $16 per share, and for the $200m in additional funds, the exercise price cannot exceed $18 per share. Baan closed at $14.0625 Wednesday on the Nasdaq, down $0.31256 for the day.
