Cedar's small shareholders take on VC goliath

NEWS Small shareholders in ailing CRM specialist Cedar are preparing to take on the might of investment group Alchemy over the future of the software firm. As part of its £4.2m rescue bid for the firm, Alchemy, with its partner Redac, offered to buy out individual investors at 5p a share. However, only 49 per cent of the company's shareholders voted in favour of the deal despite a warning from outgoing Cedar CEO Mike Harrison that the offer was the only alternative to insolvency. This left Alchemy in a position where it had to buy the remaining 1.4 million shares it needed for a majority. But Cedar's remaining small investors are still not prepared to go down without a struggle. A group of individuals, The Cedar Action Group (CAG), has gathered support totaling over 21 per cent of the company's share holdings. The group is aiming for a 25 per cent stake. That would give investors a strong negotiating position and would pose a threat to Alchemy's future plans for Cedar. Eric Ford, one of CAG's organisers, told silicon.com: "Our aim is not to obstruct Redac in their efforts to rebuild Cedar, but to cooperate and assist, provided this is not to the detriment of the minor shareholders." The group is asking questions about Cedar's fall from grace. In an interview with the Wall Street Journal last March, Harrison was buoyant about the future. "The balance sheet is good. We've got cash in the bank, we've got a good cash facility from our bankers, and we have no debt. It's a good phase to be in," he claimed. Yet shareholders have seen the value of their shares drop from a high of £14 two years ago to less than 5p. CAG is calling for closer scrutiny of Cedar's accounting practices, its relationship with Alchemy, any personal gains made by the company's directors and why shareholders weren't given the option of another rights issue earlier. But Alchemy partner Martin Bolland questioned whether CAG actually had a 21 per cent holding in Cedar. "We've not been in direct contact with them, so I'm not sure what they want," he told silicon.com. "We've provided additional funding to the company which has stabilised its position. But our 5p offer remains open to the other shareholders," Bolland added. Unusually, private investors are in the majority - accounting for around 55 per cent of shares - with institutional investors accounting for just 45 per cent.