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Peregrine Emerges From Chapter 11

August 08, 2003|From Bloomberg News

Peregrine Systems Inc., the San Diego-based software maker whose customers include Circuit City Stores Inc., exited bankruptcy protection Thursday after shedding $537 million in debt.

Peregrine completed a Chapter 11 reorganization owing about $70 million, company executives said. The company listed $607 million in debts when it sought protection in U.S. Bankruptcy Court in Wilmington, Del., in September.

Peregrine's bankruptcy filing was prompted in part by accounting problems that led to investigations by the Securities and Exchange Commission and Justice Department. The firm was forced to restate $509 million in revenue tied to inflated sales of licenses for its software.

Two former Peregrine executives have pleaded guilty to criminal charges over the restatement, and the company has reached a partial settlement with the SEC.

Peregrine's recovery plan, which took effect Thursday, gives holders of $270 million in Peregrine's 5.5% notes 30% of their claims in cash and 20% in new notes. They also will receive about 63% of the reorganized company's stock.

Unsecured creditors may choose to receive immediate payment of 60% of their claims in cash this year plus 10% a year over four years or full repayment over four years. Shareholders and securities claimants will get about 33% of the reorganized firm's stock. The remaining 4% of the stock may be split between note holders and shareholders.

Peregrine shares fell 6 cents to 50 cents over the counter.

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