Here’s an oddity, and something that is likely to form a centerpiece in the legal quagmire into which British health software group Isoft now looks to be sinking.
It’s a letter from Computer Sciences Corporation, the American IT firm that is one of the British government’s main contractors working on a new generation online healthcare system, to Isoft chairman John Weston conditionally backing the takeover of Isoft by Australia’s IBA Health.
On Tuesday CSC told Isoft that in fact it would not give its consent after all to a change in control of Isoft, a company already beset by allegations of book-cooking and which could very well go to the wall when its bank debt comes up for repayment in six months time.
The planned takeover of Isoft by IBA has been under negotiation for at least six months. Why CSC is suddenly against the deal seems to be a mystery. As a result shares in Isoft fell by 25 per cent during early trading.
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20 April 2007
Dear John
Project Sub-Contract Agreement between CSC Computer Sciences Limited (“CSC”) and Atlas for the provision of an integrated care record system and associated services dated 28 April 2004 (as amended) (“Agreement”)
I understand that you are now formally requesting that CSC provide an indication that it will consent to the acquisition of Atlas by Iguana (“Proposed Transaction”) so that Iguana can commence its meetings with investors to raise the equity component of its financing.
As we have discussed, the work undertaken by our respective teams and Iguana has been encouraging and productive. In particular, CSS has derived increased confidence that the Proposed Transaction will support and enhance Atlas’ ability to deliver on its obligations under the NHS Connecting for Health programme from the following:
(a) Iguana’s stated commitment to Lorenzo as its principal strategic product, with the NHS programme being its flagship point of reference and development focus;
(b) the increased financial stability and capacity to be provided by the proposed funding, which we understand is based on the existing contracted arrangements, and the commitment and participation of ABN AMRO;
(c) the maintenance and enhancement of Atlas’ senior management;
(d) the enhancement of the programme management, delivery organisation and capacity in India and the UK, including the proposed consolidation of Iguana’s operation in Bangalore into Atlas’ Chennai facility and the immediate availability on what appears to be a strong and credible team of domain experts to facilitate the rigorous design, build and test regime; and
(e) Iguana’s clear executive commitment to deliver under the existing contracted arrangements and timetable.
CSC will now approach the Authority to confirm that, based on the above and assuming no other material changes in circumstances; CSC would not withhold its consent to the Proposed Transaction and recommend that the Authority should provide similar confirmation.
Please note that, in any event, before CSC could formally grant its consent under the Agreement, the following would be required:
1. the Authority’s consent to the Change in Control; and
2. Iguana providing CSC with a parent company guarantee from the ultimate parent of its group in the form of the existing guarantee from Atlas.
I trust this is sufficient for Iguana to commence its meetings with investors to raise the equity component of its financing.
Yours sincerely,
Guy Hains
President & CEO – EMEA
CSC Computer Sciences Ltd
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