One of the key investors in troubled e-health software giant iSoft has claimed that the company's former executive chairman Gary Cohen was supportive of a buyout of the company by IT services giant CSC — despite the fact that Cohen last week filed legal proceedings in what appeared to be an attempt to block part of the acquisition.
CSC confirmed several weeks ago that it would attempt to buy troubled iSOFT in a move slated to finally give CSC full control over the company it has long partnered with in the UK Government's national health technology systems makeover. The move is also expected to bring long-awaited stability to iSoft, which has struggled financially in recent years.
In a statement last week, Oceania Capital, which holds about 24 per cent of iSoft, confirmed Cohen's legal action, but also alleged the executive had previously supported a CSC buyout of iSoft.
"After the performance of the iSoft business deteriorated markedly and the share price collapsed, Mr Cohen stood down as the executive chairman in June 2010, ceased to be chief executive officer in August 2010 and resigned as a director in September 2010," Oceania said in a statement to the Australian Stock Exchange last week.
"While he remained an officer of iSoft, Mr Cohen was involved in early meetings with CSC in relation to their interest in potentially making an offer for 100 per cent of iSoft, and Mr Cohen was supportive of those discussions."
Oceania did not outright state that Cohen was interested in making a counter-offer for iSoft. Instead, the company noted that a Cohen-controlled company, RJL Investments, was party to a pre-emptive legal agreement with Oceania which Cohen claimed required Oceania to give RJL a transfer notice with respect to about 15 per cent of Oceania's 24 per cent shareholding in iSOFT.
"[Oceania] has responded to RJL refuting RJL's claim that circumstances have arisen under which [Oceania] is required to give a transfer notice," wrote Oceania.
"RJL has not commenced legal proceedings against [Oceania], claiming that [Oceania] must give a transfer notice to RJL at this point in time or vote against the [CSC] scheme of arrangement."
Oceania noted that it would defend itself legally, but also that it was open to any proposal regarding iSoft's future that was superior to the CSC buyout — slated to take place at 15c per share, a significant premium to iSoft's share price before the offer became public.
"[Oceania] has made it clear to Mr Cohen that if he has a genuine proposal that is more favourable than the current proposal by CSC, that we would be happy to consider it. We have received no such proposal from Mr Cohen," the company said.
Cohen did not immediately respond to a call with the intent of requesting a response to Oceania's comments.
When iSoft prepared its annual report for the year ending 30 June, the company's other major shareholders were JP Morgan, HSBC, the National Australia Bank and other financial institutions, as well as what appeared to be Oman group, the Zubair Corporation. At that time, Cohen's company RJL held 1.9 per cent of iSOFT's stock.