Raising cash

Posted in Mandriva, English at 2:58 pm by François Bancilhon

Last week was an exciting one: we announced we were going to raise some cash, we shipped our new version of the distro, Mandriva 2007 Spring and we held our international distributor meeting in Paris.

Let me focus on the cash raise:

Because we are publicly traded, raising cash follows a rather slow process: we need a board meeting, then a shareholder meeting to put the decision up for a vote and this takes some weeks to organize. So the actual cash infusion will happen only after the May 25, if/when our shareholders approve it.

I have spent the last 5 months working on this and I am very happy we found a solution. We needed the investment and it’s been a tough race. Those who’ve done this know what I am talking about. I have looked at all possibilities (yes, all) and talked to everyone (yes, everyone) who could be potentially interested in such a deal, given the time constraints. I can now again allocate all my time and energy to running the business and I look forward to it.

The lead investor in the round of financing is Occam. Occam is a European VC fund. It’s fairly new (we are their second investment), but managed by seasoned professionals with a strong track record. They spent a lot of time understanding the market and the opportunity. We met for the first time in December and have worked with them since then. They will have two representatives on our board. They plan to be actively involved in the company and are interested in its long term prospect. I am sure they will contribute with their expertise and relationships.

We spent a lot of time on the structure of the deal. Requirements were that:

  1. We needed to get Occam in reasonably quickly.
  2. It was important that some of our existing shareholders showed their commitment to the company by participating.
  3. We all (Occam included) thought essential to allow all shareholders to get in at the same conditions as Occam and the others

So the deal is in two rounds, the first one is 1.65M€, reserved to Occam. The second one is open to all shareholders and is guaranteed by Occam and the existing shareholders: the rule is that to do such a round, you need to find investors ready to commit to fund 75% of the deal. Several of our existing shareholders are participating: Millennium Partner, currently our largest shareholder, Windhurst Capital and BBS Finance. Jacques Le Marois and yours truly are joining also. Then any shareholder who wants to participate can do so, in proportion to what he/she owns.

There is no special treatment to any one in this deal: those who participate get the exact same conditions I get, and I get the exact same conditions as Occam.

In summary, the round will be about 3M€. Occam will put about 2M€. We will get about half a million euros from the committed shareholders and we expect to get about another half from the other existing shareholders.

The subscription price is set a 0.34€ a share, which means pre-money valuation of the company is 2M€. How was the price set? the same way price is set in any financial transaction: at the level where the seller finds a buyer. Would I have liked to get the price higher? you bet, I’m a shareholder. Am I happy we closed this deal? you bet, I’m a shareholder.

We, of course, discussed the set up and its announcement with the AMF (French equivalent of SEC), listened to their suggestions and took them into account.

Besides rebuilding our cash situation, we will use the funds for two purposes:

Get out of Chapter 11.

Technically, we are still currently in a Chapter 11 process (“redressement judiciaire” in French), since February 2003. So we still have some creditors to repay. And we’re executing a plan by which we replay about 100k€ per year. The plan could go on until 2013, but it is actually a handicap in many ways: some public bids are forbidden to companies in our situation, both at the French and European level, and even when they are not, it’s a bad image. Our listing in a better market than Marché Libre is also virtually prohibited by this situation: Chapt 11 companies are put in a special compartment for “sick companies”, not a very attractive proposition. So, we will repay entirely our remaining debt (about 700K€) and we will become clean again.

Acquire Linbox.

We have been talking to Linbox for a very long time (some people would say too long). Last year, we signed an agreement with them, for an acquisition, which was a paper only deal (exchange our shares against their shares), which valued them at about 1.3M€ in shares. But, as we were ready to execute, things went south: our numbers went bad, our stock tanked, and this was of course considered “substantial changes in the situation of the company”. So we put the deal on hold, till we could get back the company to stable situation. In the meanwhile, we started working with the Linbox people, and their Paris employees moved into our offices. As we worked together on some business deals, we became more and more convinced that putting the companies together made a lot of sense. So, as we reached agreement with Occam, we renegotiated the conditions. We’re now acquiring Linbox for 280K€ in cash and 200K€ in stock. This will be presented to shareholder vote at the May 25 meeting. I look forward to working with the Linbox team and grow the business together.


  1. Julien said,

    April 23, 2007 at 7:15 pm

    Felicitations François.
    et bravo pour cette transparence.

  2. Moulinneuf said,

    April 23, 2007 at 11:08 pm

    -= Raising Cash =-

    Instead or trying to raise sales , and making spring a commercial success …

    Everything here and some more :


    should be on :


    contrast that with :


    You spent 5 month on it and the best you could come up with was a 2-3 million investment … No people who have really done it before , and who took 5 month, usually come back with a 2 digit number like 30 -50 million.

    -= The lead investor =-

    “European VC fund. It’s fairly new “

    Then why the heck is it FIRST investor with such a poor investment of 2-3 million , it must be because the real old one don’t trust you and are not ready to invest QUICKLY to save in your failed 5 year strategy ( you have been at the helm since 2002)

    -= The Deal =-

    The Deal only profit people like you who are small crooks who can get in at .32 cents as a steal when the stock price should be above 12 Euro and closer to 55 Euro

    Also the deal doesn’t fix the fundamental broken stock situation. Please tell me how a

    Mandriva 5 908 889 title

    is to compete with

    Red Hat 192 175 000 title

    Any sane CEO/Chairman would ask the entire company shareolder to give to him back the entire stock so that you can triple its number of title at minimum.

    They would also refuse any deal that will not make Mandriva grow in the next 10 years and is only a quick fix for poor management decisions.


    Get out of Chapter 11. ( already lied once … )

    Tuesday March 30 2004


    “Mandrakesoft Exits Bankruptcy”


    -= Acquire Linbox. =-

    Put the deal on ice or rework the detail offer 400K€ over 8 years instead of one payment ( they save money on taxes ) and no stocks. But no you have to absolutely buy Linbox at a time where money is low and NOW … NO …


    - Instead of paying debts you made acquisition at too high a price of failing company asset instead of the team and people in it.

    - Instead of acknowledging the stock value declining adressing the competitive problem with the number of stock , and having/hiring a real CFO to fix the problem , you let it slide and when you realised that something was wrong you tried to fix the problem with your own usual incompetence on the subject …

    - You have let company wide problem that are costing it daily if not by the minutes problem slide because you don’t see them as problems :

    - You have broken intentionally the Mandrica Club and diverted consumer funds and key employee to help make you professional products that don’t sale.

    Etc …

    Please give the name of the AMF responsible to give the go ahead for an exclusive deal that make outsider take on share of company that where bought by minority investors at 3euro + for .33 cents when they trade at .68 cents.


    There is a way to switch to another Stock Market that is legal and would be more profitable then your stupid deal for the current shareholders.

    But for me to talk about it, it would involve that you resign as CEO and Chairman immediately and that all your group of thief sign a proxy to me for all there shares and that you all stay on board for a year for free and that after one year you start repaying your salary for the years of service that you where paid for but actively did not do your jobs , instead of a lawsuit for gross negligence.

    Lets make an open bet on that last part , you say it don’t exist I know two way to do it …

    And other consideration like HURD received for joining HP.

    I am available now to act as acting CEO and Chairman for the fee of 1 Dollar Canadian for both job plus commission of 1 euro on every product and service sold.

    Another thing I strongly question the legality behind your ability to have money left/availaible to buy in a *special* deal , why dont you buy the stock at current price , encourage others to do the same , at higher value to make the stock go higher then ? So that all current shareholders involved win back some money , No wait that would mean your not in on tanking the stock value … Witch I don’t believe for a second.

    - Moulinneuf

    Its a question of trust I guess , nobody will trust the word of a simple Mandrakian over the word of a CEO/Chairman who is responsible for Mandriva current situation after 5 years as CEO.


    On second thought , I changed my mind , I owe it to the Mandriva community to share the info now , you get to decide.

    See how wrong you are to trust those thieves :

    The two possibilities are as follow :

    - Constitute a new corporation on the stock market you want to join , and have that corporation buy Mandriva shares 1 of there share for 1 of Mandriva , 2 of there share for 1 of Mandriva , 5 of there sahere for 5 of Mandriva and fix the number of title competitive problem .

    - “blank-check” company on the stock market you want to join. Have it buy Mandriva.





  3. bibri said,

    April 24, 2007 at 10:21 am

    Good news!

  4. ReinoutS said,

    April 24, 2007 at 2:56 pm

    As a tiny Mandriva shareholder I appreciate it that you inform the community about what’s going on!

  5. DoK said,

    April 24, 2007 at 6:26 pm

    Thanks for the info. It clarifies things a little on the finnancial side.
    However some points remain obscure -
    Mandriva 2007 shows much healthier attitude then the one of 2006* but Mandriva as a corporate didn’t state it is taking any new path.
    The feeling was that you are the one that pushed to go to the corporate market over the community - do you see things different now?

    * With 2007 mandriva finaly (or should I say “again”) sows understanding that the community, as represented by mandriva club members and the general free-version users, is a major player in the free software world and can’t be held for just another way to get money financing mandriva’s attamps to get bigger Corporate-Linux market share.

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