UK firm steps up to revive Jade

By ADAM GIFFORD

The financial clouds hanging over one-time glamour software firm Jade have lifted with a $25 million capital infusion.

The Christchurch company is likely to get the bulk of the money from British financial services firm Skipton Building Society.

The deal values the company at about $50 million. The final shareholdings will not be known until November 30 as shareholders can subscribe to avoid diluting their stakes.

Chief executive Rod Carr said $3.2 million would be spent buying shares held in trust for former members of the Aoraki staff superannuation scheme. About $6 million would be spent buying back convertible notes and $3 million would pay off subordinated debt and mezzanine finance.

Carr said: "About half this money is to clean up the balance sheet. Tightly held private companies going through growth stages often get messy balance sheets ... "

Jade's messy balance sheet was a result of a struggle to reinvent itself.

Its previous incarnation, Aoraki Corporation, developed and maintained the Linc development language used on Unisys mainframe computers.

In 1996, founder Sir Gill Simpson foresaw the demise of mainframe computing and developed a new technology, Jade. As Linc revenue declined, Jade revenue grew, but not fast enough to cover expenses.

When Carr, a former Reserve Bank deputy governor, was brought in last year, he found a debt-burdened company.

In 2003 Jade had operating expenses of $45.9 million against operating revenue of $30.3 million.

He laid off almost 100 of the 380 staff. A property portfolio built up in the good times was sold and $12.5 million in mandatory convertible notes, issued as part of an earlier capital raising, were turned into shares.

That had the effect of diluting Simpson's 90 per cent stake down to about 12 per cent.

The latest infusion of capital will bring Simpson's holding to less than 10 per cent and will mean a majority of shares in the company will be in foreign hands.

Carr said it was possible, but unlikely, that a single shareholder would have a controlling interest.

Simpson will continue as a director. Carr will also join the board in November as managing director.

Carr said Skipton, Britain's seventh largest building society with 7.5 billion in assets, was a long time Linc user which recently migrated its mortgage and savings applications to Jade.