PeopleSoft expects its re-purchase of spin-out Momentum Business Applications to be delayed slightly due to staffing issues at the US Securities and Exchange Commission (SEC).
The applications supplier now expects its $90 million cash purchase of Momentum to close on 9 April rather than at the end of March because a key member of staff at the SEC was sick and so unable to review some “immaterial” changes that had to be made to PeopleSoft’s original filing.
The proposed buy back of Momentum, which PeopleSoft spun off in 1999, put the company under the microscope in the wake of the Enron scandal. Momentum was created as an off-balance sheet entity to enable it to transfer some of the research and development costs associated with web-enabling its applications from the company’s books.
While the SEC has said that the arrangement is legal, investors have expressed concern that the buy back may hurt PeopleSoft financially, although the supplier claims that the effects will be minimal.
In an SEC filing, PeopleSoft said that Dave Duffield, the firm’s joint founder and current chairman, would hold 6.3 per cent of Momentum’s shares when the deal closes, including 70,000 shares owned by a charitable foundation that Duffield is involved with.
Meanwhile, PeopleSoft is spending at least $1 million to establish a presence in China and is due to open an office in Beijing next week, staffed by 15 research and development engineers.
The aim is to double staff numbers in the year ahead by taking on sales people and consultants to focus on the utilities and financial services industries