February 01, 2012, Wed 4:35 PM Business
The NGI Fund of Former Telecommunications Minister Leonid Reiman was unable to sell French developer Mandriva Linux for debt. Swiss investors made attempts to save the company from bankruptcy, but Bryan Garnier, a bank and co-owner of Mandriva, rejected the offer.
French software developer Mandriva Linux's minority shareholder rejected the offer to buy the company, currently on the brink of bankruptcy. Jean-Manuel Croset, Mandriva's chief operating officer, announced this on the company's corporate blog. The offer was supposed to save the company from bankruptcy, which Dominique Loucougain, the company's CEO, had been promising to announce, should shareholders not find any other options for the company's future financing.
NGI Fund, which has Telecommunications Minister Leonid Reiman as one of its shareholders, has owned 51% of Mandriva shares since 2010. Reiman had become the chairman of the French company’s board of directors.
The Occam Fund, with the French bank Bryan Garnier managing its assets, owns 42% of Mandriva, which for many years has been in financial trouble. Last year a plan to restructure was offered, which called for the additional issue of 4 million Euros and the company’s being bought out by its two biggest shareholders.
NGI supported this plan, but Bryan Garnier refused to participate in the additional issue. The Russian company was prepared to swing in and buy out the additional issue by itself, but the French shareholder still blocked that plan.
Henceforth Mandriva's management offered to sell the company to the new shareholder, who was supposed to be given an answer before 27 January.
A CNews source close to the draft deal said that this new shareholder was the Swiss shareholder. The plan was for it to buy out Mandriva shares and assume 2 million Euros in debt, a significant amount of the company's debt. More than a million of this amount belongs to NGI, which offered Mandriva to put up the money to refinance its debt. NGI, including the loans it provided, has invested more than 3 million Euros in Mandriva.
“After having studied two possible options for how events will unfurl – either Mandriva’s bankruptcy or selling the company to the investor, who would then compensate part of the expenses – NGI went with the second option,” the CNews source reported. “Bryan Garnier, however, still objected, because The Occam fund, in which it owns a share of Mandriva, has wanted to write off its investments in Mandriva for a long time now. Therefore, the company’s bankruptcy doesn’t scare the bank.” NGI declined to comment.
As so happens, Mandriva’s promised bankruptcy never actually took place. Croset writes that the company’s financial standing turned out to be better than was expected. Moreover, there is newfound hope that the company will receive financial aid from Paris’s Department of Regional Economic Development. These circumstances together are making it possible to put off a final decision on Mandriva’s future until the middle of February.
A source at one of Mandriva’s competitors doesn’t count out that an organization connected to NGI could be the anonymous investor that has tried to purchase Mandriva. “The Russians are interested in establishing full control over Mandriva and buying out Bryan Garnier’s share,” the CNews source says. “NGI controls Mandriva’s management and could use bankruptcy as intimidation to get Bryan Garnier to agree to sell its shares for less.” NGI refused to comment.