Baltimore shores up finances with forced £20.5m disposal of Content

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Baltimore Technologies, the troubled internet security software company, yesterday found a buyer for its Content Technologies unit although the £20.5m sale price was a fraction of the £702.5m it had paid for the business a year earlier.

But the £12m cash that the deal brings in, combined with the cost savings that will come from the transfer of some 180 to 200 staff, secures Baltimore's future for another year.

"I think we are stabilising and, in my view, positioning Baltimore for a very good future," said Bijan Khezri, Baltimore's chief executive. "The business is not going to be dead in the next three or six months and certainly not the next nine months. What is important is that in the next three to six months, Baltimore improves its capacity for cash generation and its technology leadership."

Its continued investment in research and development, the company said, would delay its target of becoming profitable on an underlying, or Ebitda, basis by six to nine months from the second quarter of the year.

Baltimore is selling Content to Clearswift, a privately-owned UK software group, for £12m cash. It is also gaining £2.5m of loan notes as well as £6m worth of preference shares, equating to an 11 per cent stake in the company.

The price was well beneath expectations. It is thought the company had hoped to sell Content for £25m to £50m in an all-cash deal. Defending the move, however, Mr Khezri said that "merger and acquisition" markets had "dramatically" deteriorated and added that he had always hoped to keep a stake in Content.

Baltimore also said, that taking into account the £12m of cash from the sale, it believed it would have sufficient working capital for its present requirements – "that is for at least the next 12 months". The deal, which is expected to complete in March once shareholders have approved it, came as Baltimore announced that the business had now stabilised and that revenues had stopped deteriorating.

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