Misys PLC announced this afternoon in London that it will delay its its scheduled September 22 extraordinary general meeting to approve its merger with Allscripts until October 6. Its lead advisor, Lehman Brothers, filed for Chapter 11 bankruptcy protection yesterday, leaving Misys scrambling for the $330 million it needs to pay off existing shareholders of Allscripts under terms of the merger agreement.
The analyst who led the story had this to say earlier today, before the meeting date was changed:
"The major cash outgoing is the $330m dividend to be paid to Allscripts’ shareholders five days after the deal closes (around 1 October). So we imagine Misys has some two weeks to find funding in a tricky (and possibly expensive) market. It is unclear whether the EGM [on 22 September to ratify the deal] can proceed if the facilities are no longer in place, but we would assume so.
"While this must be the worst two weeks of the crunch so far to go shopping for a $305m facility, we assume one is available at some price and as such we imagine the deal should still go through. Certainly Misys must be working overtime to ensure it does. Its own healthcare business was already in sharp decline. It has stopped investing in R&D in its own business and we suspect business has continued to be poor. Quite apart from any break fees (£7.1m), the business would not be in good shape on its own. While we do not believe that will happen, the risk has just increased."