Court sets iSoft 'exit' fees, splits investors

As legal eagles circle the iSoft/CSC buyout deal, a judge has today revealed what iSoft has to pay CSC if it decides it's found a better offer.

CSC announced its intention to acquire iSoft in April for $0.17 per share, a proposal that drew the ire of former executive chairman Gary Cohen, who believed that he could find a better offer for the company, and sought to block the acquisition in the courts.

Justice Arthur Emmett told the NSW Federal Court today that iSoft can expect to cough up roughly one per cent of the total acquisition value — or $1.82 million — if the software company's board finds and signs a superior takeover offer than CSC.

A spat had also erupted in court over the value that CSC was set to pay for iSoft's convertible notes. Emmett told the court in April that he thought the convertible notes were perhaps not worth as much as they were being paid for.

He today ruled that Oceania Healthcare's share of convertible notes would be paid out at the price that CSC had originally offered, while placing the company in a separate group to the ordinary shareholders of iSoft, in that a separate shareholder meeting would be called for the two. Justice Emmett said that it would be necessary to have a relevant majority in each meeting to approve the takeover.

"It is apparent that there is a benefit to be provided to the holders of the convertible notes since [Oceania Healthcare] is also a holder of substantial number of shares in iSoft capital. There would be a concern that [Oceania Healthcare] is receiving a benefit which is not being afforded to the other shareholders of iSoft. For that reason, it is appropriate there are separate meetings of shareholders," Emmett said.

Cohen told ZDNet Australia in court today that he was happy with the result.