Beleaguered database supplier Informix has gained a much-needed injection of funds from a Manhattan-based investment firm, which specialises in bailing out companies that are strapped for cash.
Fletcher Asset Management announced last week that it had taken a $40 million stake in Informix, which last week reported second quarter losses of $120.5 million. A further $35 million of convertible preferred shares have been offered to the investment firm if it wants a further stake. Fletcher?s policy is to pick damaged companies which are in urgent need of funding, but which are often shunned by larger Wall Street institutions as a bad risk.
An Informix representative said the money would be used to fund operations, adding that it has plenty of cash in hand. According to its second quarter figures, the company has $104 million cash in the bank, down from $120 million at the end of the first quarter.
Its financial predicament is not set to improve in the short term, following Informix? announcement last week that it intends to restate its 1996 results after uncovering irregularities in its accounting practices. Alan Hendricks, chief financial officer, resigned in April after only three months in the job. A replacement has not been announced.
It is expected that Informix? full year results ? the company initially reported a profit of $97.8 million ? will have to be downgraded by as much as $100 million, putting the company into the red for 1996.
One of the main problems which contributed to the company?s losses was its practice of recording licence income from products which had been shipped into the reseller channel but had not yet been sold on to customers.
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