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Floating to the top?
November 2007
by Jeffrey Bouley  |  Email the author
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CAMBRIDGE, Mass.—Seeking an infusion of cash to help its global growth plan and to boost its operations both in the United States and in Europe—where it has a second headquarters in Cambridge, U.K.—CambridgeSoft Corp. is seeking admission of its common stock to trading on the London Stock Exchange's Alternative Investment Market (AIM). The company offers an integrated suite of desktop software, enterprise informatics and knowledge management products to improve the productivity of researchers in the discovery, development and commercialization of compounds in the life sciences and chemical industries.
The decision to use an AIM flotation is distinct from the initial public offering route that many companies have chosen over the years. For one thing, the AIM float will be used as a means of  placing new and existing common stock to qualified institutional investors in the United Kingdom, United States and certain other jurisdictions. The stock would not be offered to the public in any of those jurisdictions.
AIM is attractive for an increasing number of companies because it has no requirements for capitalization or number of shares issued—and it can offer significant tax advantages for investors, as well as less regulatory burden for companies.
Right now, AIM is the place for growing companies, maintains Robert Scoffin, head of CambridgeSoft's European operations, in part because it is less U.S.-centric than the NASDAQ and doesn't limit where investment comes from.
The company plans to use the net proceeds from the placing for working capital and other general corporate purposes, including sales and marketing expenditures, research and development expenditures and capital expenditures. But in addition to that, CambridgeSoft executives believe that opportunities may exist to expand through strategic alliances with companies or acquisitions of other companies, products or technologies—and funds from the AIM float may assist those efforts.
"The [AIM placement] is an important next step in our development and will allow us to accelerate growth and strengthen our position within our sector," says Michael G. Tomasic, president, CEO and director of CambridgeSoft, adding that his company presents an attractive financial and operational model because "CambridgeSoft has significant revenues and strong positive cash flow, and seeks to reduce operating costs through aggressive outsourcing to provide better products at lower prices to the customer."
The company had total revenues of $22.5 million and net loss of $3.4 million in 2006; in the first half of this year it was already posting total revenues of $14.1 million and net loss of $1.3 million.
One strength, Tomasic notes, is that CambridgeSoft's presence in 15 countries allows access to a broad skill set and makes it able to service customers in their own time zones and languages.
Scoffin says the company will invest in European research and development, in particular, by hiring more staff in the United Kingdom and expanding that Cambridge office, located in an area known as the Silicon Fen.
Details on the timing of the placement remain to be released, and the company hasn't publicly discolosed any dollar amounts, though at least one media outlet, London-based wealth-bulletin.com, reports that the company is hoping to raise $200 million, "despite the recent credit crunch conditions."
Nomura International plc will act as the company's nominated adviser, broker, bookrunner and joint lead manager, with support from Thomas Weisel Partners LLC as joint lead manager and Seymour Pierce as co-manager.
 
 
Code: E110707

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