Cendant considers selling former CUC units - WSJ
NEW YORK, July 31 (Reuters) - Cendant Corp. (NYSE:CD) Chairman and Chief Executive Officer Henry Silverman said Thursday he is considering selling businesses that were part of CUC, the company accused of accounting fraud that combined with HFC Inc in December to form Cendant, the Wall Street Journal reported Friday.
Silverman told the Wall Street Journal he had considered unraveling the merger that created Cendant but decided it would be too cumbersome. Instead, he said he is considering selling software and publishing businesses that were part of CUC and possibly part of an interactive network in a public offering.
Cendant, based in Parsippany, N.J., has said that over three years, CUC booked roughly $500 million in accounting deception and $200 million in errors through improper accounting. Arthur Andersen LLP, hired by Cendant directors to conduct an independent audit, told the board this week that 61 percent of 1997 net income reported by CUC was nonexistent.
Walter Forbes, Cendant's former chairman, resigned Tuesday along with nine directors of the company. Forbes was chief executive officer of CUC during the three years in which auditors say the accounting fraud and errors took place.
Cendant has received unsolicited proposals for three former CUC businesses, Silverman told the Wall Street Journal. The proposed transactions could bring it proceeds of about $2 billion, he said.
One proposal is for Cendant Software, which could be sold outright or sold to the public. Hebdo Mag International, whose magazines carry only classified advertising, has received an offer from current management to buy the company.
To take advantage of the current market for Internet stocks, Cendant is considering selling to the public or an investor group 20 percent to 40 percent of its interactive membership clubs, Silverman told the newspaper.
Additionally, he told the newspaper that Cendant will report net income of $0.21 cents a share for the second quarter, in line with some analysts' estimates.
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