buyout by csc

Looks like shareholders not to receive much more than 5 cents a share.

Dream ends for iSoft with $300m buyout

WHEN Gary Cohen's IBA Health agreed to buy troubled UK group iSoft in 2007, he had visions of creating one of the largest health-care information technology providers in the world.

Cohen, who was ousted last year from the company now called iSoft, is infamous for dreaming big but delivering little.

What followed was years of underperformance that has left the share price at 5c, compared with the $1.21 it closed at on the day IBA announced its agreement with iSoft, and debt of about $260 million -- more than four and a half times its current market capitalisation.

This week, the UBS-advised iSoft is poised to be bought out by the New York-listed Computer Sciences Corporation.

It's believed IT services giant CSC, which is iSoft's biggest customer, could finalise a more than $300m takeover deal for the company as early as today. ISoft is a major supplier to the UK government, which is in the midst of a pound stg. 12.7 billion ($20bn) overhaul of the National Health Service's IT systems. (CSC subcontracted iSoft to carry out the work before the IBA buyout.)

The deal is expected to allow lenders including Barclays, Westpac, Bank of Ireland, Santander, Clydesdale and KfW Bankengruppe to recoup their loans and pay back major shareholder Oceania Capital Partners (formerly Allco Equity Partners) which holds about $40m in convertible notes.

But Oceania -- which bought into the company in late 2007 at 80c a share -- and iSoft's other shareholders including Maple-Brown Abbott and Orbis are unlikely to receive much more than the 5c a share the stock last traded at. Shares in iSoft had a bit of a run before being suspended from trading last Thursday, rising from 3c earlier last week.