Systems Software Associates?(SSA) stock price has more than halved over the past month in the wake of the applications supplier borrowing $12 million from an unknown investor.
The company?s stock had been trading at between $10-14 per share during the last six months, but had crashed to as little as $4.375 by last Friday. The decline began about the middle of March and intensified after 27 March, when SSA announced it was receiving a $12 million loan from an undisclosed investor, which was payable in three years.
The investor is also expected to take an equity stake in the company.
An SSA spokesman said: ?There?s no negative news coming out of the company and the share price doesn?t reflect the real position of the firm - our stock is ridiculously underpriced and I don?t know why it?s dropped so far so fast.?
He added that poor end of year figures had adversely affected the share price and there had possibly not been sufficient good news to change analysts? minds since.
But ?the share value really crashed when we announced our loan conversion price of $3.33 and that?s when people seemed to get worried,? he said.
The loan will be spent on financing ongoing business, which was necessary, the spokesman said, because SSA had spent $100 million last year in research and development alone, although its revenues were only $340 million.
This is only the latest in a string of hard times for SSA in the past nine months. Last September, the firm fell out with its auditors of 15 years, Price Waterhouse, over whether it should have booked three contracts over the 1994-5 accounting periods.
SSA subsequently sacked the organisation and appointed KPMG Peat Marwick to take over, but KPMG upheld the decision to reverse $10.1 million in revenues for 1994 and $20 million for 1995.
Then, for the year ending 31 October 1996, SSA generated sales of only $226.7 million, down nine per cent from $250 million in the previous year, with net losses of $32.8 million, compared with profits of $26.6 million the year before.
It hopes to be back in profit by its second fiscal quarter, in July.
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