Baltimore Technologies, once a member of the exclusive FTSE 100 index, has been given an extended lease of life after it finally offloaded its Content Technologies subsidiary for £20.5 million sterling (¤33 million) to privately owned British software group Clearswift.
The price for Content - bought by Baltimore last year for £690 million in an all-share deal - is very much at the lower end of expectations. It will, however, reduce Baltimore's "cash burn" - the speed at which it eats into its cash reserves - to less than £5 million per quarter. Baltimore chief executive Mr Bijan Khezri said the group was likely to become earnings positive by the first quarter of 2003.
Baltimore will receive an up- front payment of £12 million from Clearswift, a further £2.5 million in 12-month loan notes and £6 million in Clearswift preference shares. The preference shares mean Baltimore will have an 11 per cent stake in Clearswift. In addition, Clearswift will assume the bulk of Content's £8.1 million net liabilities.
Content was on the market for almost six months, with an initial price projection of £50 million. Two months ago, British group Surfcontrol abandoned negotiations on the purchase of Content.
Clearswift, a provider of e-mail security systems, includes Standard Life, National Car Parks, HM Customs and Marks & Spencer amongst its clients. The company is backed by private equity group Amadeus Capital Partners. The deal to buy Content involves new equity being issued to Amadeus, Cazenove Private Equity, Kennet Capital, Baltimore and other investors.
Davy Stockbrokers technology analyst Mr Barry Dixon welcomed the sale but noted the low price. He said if Baltimore achieved its aim of being cash-positive by early 2003, the company had a reasonable chance of recovery.
