Cowpland goes at it again: "It's pretty self-explanatory, and we're just weeks away from a huge upside for the company," he said. "We're looking at huge global opportunities. We can't help but be hugely optimistic." ... I think I'm Gonna PUKE!
Mr. Bean
canoe.ca
Saturday, October 4, 1997
Cowpland made $20M share sale before stock dropped
By JILL VARDY
Technology Reporter The Financial Post
OTTAWA -- Corel Corp. president Michael Cowpland said Friday he
didn't know the company was facing one of its most disastrous quarters
when he sold $20.5 million worth of Corel shares in August.
Documents filed with the Quebec Securities Commission show
Cowpland sold $20.5-million worth of Corel stock just weeks before
the company reported a surprising loss in its third quarter.
The insider trading report shows the Corel president and chief executive sold 2.43 million shares for prices ranging from $8.20 to $8.80 during
the period of Aug. 11 to 14.
On Sept. 10, Corel warned analysts its quarter ended Aug. 31 would
show an unexpected net loss of US$32 million because revenue was
40% lower than predicted. Since then, Corel stock has plummeted to 52-week lows. On Friday,
the shares (COS/TSE) closed at $5.55, up 5›. In the U.S., the stock (COSFf/NASDAQ) closed at US$41/16, up 1/8.
Cowpland denies he knew about the third-quarter loss when he sold the stock.
"The quarter looked like it was made at that point," he said. It was only the following month when Corel found a "hefty amount of inventory" shipped to distributors had not been sold to consumers, Cowpland said.
The Corel head said he needed the cash from the stock sales to pay off personal bank debts and taxes.
"With the huge taxes we pay in this country, you sometimes end up having bank loans and they come due," Cowpland said. "When you're paying 50% tax, it does mount up."
He said he thought the stock was as low as it would go when he sold his shares.
"I was disappointed to get such a low price, but I thought it would be prudent to be in a paid-off position [with the bank] and focus on the upside ahead, while retaining a 10% stock in the company." Cowpland said.
"My definite expectation is that these shares will be flying high again soon." He still owns about 5.5 million Corel shares.
Cowpland said the entire $20.5 million was used to pay off debt, adding, "if I had any excess cash, I would be putting it into Corel."
The timing of Cowpland's sales has raised eyebrows among analysts who note that David Kramer of RBC Dominion Securities Inc. initiated coverage of Corel with a "buy" recommendation and a target price of $12 on Aug. 12. That same day, four large blocks of Corel shares -- 1.7 million in all -- were sold by CIBC Woody Gundy, for whom Cowpland's broker works.
When asked about the heavy volume that day, Corel officials said it appeared to have been prompted by Kramer's favorable report.
RBC Dominion Securities has a policy that forbids its analysts from speaking to the press, so Kramer was not available for comment Friday.
Cowpland said he did not know Kramer's report was due out and had decided to sell his shares the week before.
A spokesman for the Ontario Securities Commission confirmed Cowpland's insider trading report was also filed with the Ontario regulator, but has not yet been published in the OSC's weekly insider trading reports.
OSC director of corporate relations Mark Conacher said he doesn't know if the OSC has been asked to examine Cowpland's trades to see if they suggest he profited from insider knowledge.
If such an investigation is taking place, it would not be made public unless a notice of hearing on the action is issued, Conacher said.
This isn't the first stock transaction Cowpland made during the summer. In July, he exercised
options to buy 455,910 shares at $7.70, and then sold them immediately for $8.70.
Cowpland said he isn't worried about how investors and analysts will view his actions.
"It's pretty self-explanatory, and we're just weeks away from a huge upside for the company," he
said. "We're looking at huge global opportunities. We can't help but be hugely optimistic." |
