Confident it has a firm grasp on the resources necessary to execute the $7.5 billion hostile takeover bid of PeopleSoft Inc., Oracle Corp. has decided to lower the amount of its credit line to $1.5 billion from $5 billion needed to purchase the rival applications software provider.
A recent document filed with the Securities and Exchange Commission by Redwood Shores, Calif.-based Oracle shows the behemoth database vendor has negotiated a 364-day $1.5 billion line of credit with Credit Suisse First Boston, ABN Amro Bank NV and other syndicated lenders for the PeopleSoft acquisition. The move effectively replaces a prior $5 billion credit line agreement Oracle had in tow once it announced its purchase intentions on June 9.
Oracle lowered its credit amount with investment bankers due to the company having enough money on hand on its balance sheet, according to an Oracle spokesperson. In addition, the spokesperson noted, the PeopleSoft tender offer remains fully funded and will not fall under any type of financing conditions.
Oracle estimates it will need a total of about $7.5 billion to purchase the PeopleSoft shares at its current asking price of $19.50 a share, and to pay out for related fees and expenses. As of mid-December, 12,395,576 shares of PeopleSofts stock have been tendered to Oracle.
Should the anticipated loans fall through, Oracle expects it can raise funds either through additional borrowing or through the issuance of securities, according to the SEC filling.
On Dec. 19, Oracle extended its tender offer for rival PeopleSoft, of Pleasanton, Calif., to Feb. 13, 2004. This is the third time Oracle has extended its offer since the initial bid was lobbed in June. This latest offer was set to expire today.
The hostile bid has been on hold pending investigations by the Department of Justice and the European Union, both of which are looking at potential antitrust issues.
A DOJ spokeswoman said this morning no decisions have been made in regard to Oracles bid for PeopleSoft. Oracle has said in the past it expects a decision from the DOJ sometime in January.
Led by CEO Craig Conway, PeopleSoft management has thus far resisted Oracles buyout bid. PeopleSoft remains unmoved from its position that it will successfully thwart Oracles takeover attempt once the dust clears.
Oracle has countered by having plans to institute a deck of alternative directors for PeopleSoft, thus offering PeopleSoft shareholders the option to be bought outright by Oracle by voting for Oracles directors and weakening PeopleSofts resolve from the inside.