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March 2, 1999

FOUNDERS BUY LERNOUT & HAUSPIE SHARES

By CBR Staff Writer

Shares in Lernout & Hauspie Speech Products NV, the Belgian speech recognition software company, rose 9.3% to $30.12 yesterday after news that the outfitÆs two founders plan to acquire $40m of shares in the company. Jo Lernout and Pol Hauspie said the company was an outstanding prospect and that at current prices the stock was an attractive investment opportunity. They are probably alone in this sentiment as the shares have been on a steady downwards course since they topped $60 in May 1998. Nor is the manner of their share-buying operation likely to increase long-term confidence. They have arranged a line of bank credit to buy the shares which is secured by a portion of the two menÆs beneficial holdings in Lernout & Hauspie Speech Products NV. Using shares as security to buy more of the same shares is a risky gambit if events turn against the company and the shares continue to fall. One precedent is the problems faced by the brothers behind Baan Company NV. Their family company was forced to sell 8% of the Baan’s equity to reduce debts when a collapse in the companyÆs share price meant it did not offer sufficient collateral for loans (CI No 3,530).

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