Cedar saved from the axe

NEWS CRM software vendor Cedar has accepted a £3.8m takeover bid from venture capitalists Alchemy Partners and warned shareholders that the company will be forced to file for bankruptcy if they do not approve the deal. The deal, which values Cedar shares at 5p each, was approved this morning by company directors, but shareholders still have 21 days to approve or reject the offer. In a statement, Cedar directors said the company was in "urgent need of additional financing facilities" and that bankruptcy proceedings would go ahead if the offer is unsuccessful. At the height of the technology stock boom, Cedar had a market valuation of £964.4m, but in September shares slumped 93 per cent in just two days after the company issued a profit warning. Cedar never regained its former glory and in the six months between March and September 2001 net debt increased tenfold, from £3.8m to £38.3m, according to interim results released at the end of December. Martin Boland, a partner with Alchemy Partners, said that while it would take 12 months to get Cedar back to financial stability, he believed the company had the potential to be a strong market player again. "Cedar is a fundamentally good company, but it's a company that put in place too large a cost base believing that growth would be greater than it was. We believe the company is stable and with financial stability it will be a good business," he said In the meantime, Cedar has secured a £10m short-term emergency bank loan on condition the offer is approved. Shares in the company jumped 35.7 per cent following the announcement this morning to trade at 4.9p.