The Linux and identity-management software vendor was expecting the stock market delisting notice after a review of its accounting practices led to a delay in filing its quarterly report, but disputed the notice from Well Fargo Bank that it has also defaulted on its debt obligations.
Novell does not believe that it has failed to perform its obligations under the indenture, the Waltham, Massachusetts-based company said in a statement. Novell believes that the… notice of default is invalid and without merit.
The company maintained that the terms of its indenture require it to provide the trustee, Wells Fargo, with copies of all Securities and Exchange Commission filings within 15 days of the filing being made.
It added that it would fulfill that requirement as soon as it has filed its 10-Q for the quarter ended July 31, 2006, with the SEC. That will not happen until the company’s audit committee has completed its ongoing review of Novell’s stock-based compensation practices.
The review was launched last month after a preliminary review of historic stock-based compensation prompted by ongoing concerns over stock-based compensation practices at many companies in the IT industry and beyond.
Novell has not said that it has found any irregularities but did announce in August that a preliminary enquiry had prompted it to hire outside lawyers to conduct a formal review.
Given the inevitable delay in filing the company’s quarterly report for the third quarter, a notice of potential Nasdaq delisting had been expected. Novell said it will appeal the delisting and request a hearing with the Nasdaq qualifications panel.
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