In an amended 13D filing after the close on Docucorp International Inc. (Nasdaq: DOCC) 5.6% holder BlueLine Capital said it offered to enter into a confidentiality agreement with the Company so that BlueLine and its partners could explore the opportunity to make a offer for the Company materially above the $10.00 proposed in the Merger Agreement with Skywire Software.
The firm said in an email dated December 12, 2006, a representative of the Company refused to discuss any transaction with BlueLine despite the possibility that BlueLine’s proposal may be significantly better than the terms under the current Merger Agreement.
A Copy of the Letter:
Gentleman:
BlueLine Partners, L.L.C. (“BlueLine”), through its affiliated entities, currently owns approximately 5.6%, of the common stock of Docucorp International, Inc. (“Docucorp” or the “Company”) and is the Company’s third largest stockholder. BlueLine takes an operations-centric approach to its investments with the principal consideration being the potential of the underlying business opportunity. Since becoming a stockholder of the Company, BlueLine has met several times with Michael D. Andereck, Docucorp’s CEO, to offer advice and discuss strategic alternatives for increasing the Company’s value.
BlueLine believes that Docucorp is currently undervalued relative to its potential. Despite recent challenges around integrating the Newbridge assets, slower than anticipated penetration into the healthcare segment and relatively flat new software license revenues, the underlying business and the Company’s future potential remains very strong. As a result BlueLine has since October 2006 been considering the possibility of offering to acquire the Company in a go-private transaction. Several private equity partners and other interested investors have expressed a willingness to join BlueLine in this endeavor. Subject to execution of a confidentiality agreement and further analysis of the Company’s records, BlueLine believes that it, along with its partners, can make a cash offer for all of the outstanding common stock of the Company at a purchase price materially above the $10.00 proposed in the Agreement and Plan of Merger dated as of December 6, 2006 by and among Skywire Software, LLC, Skywire Star Acquisition Corp. and the Company (the “Merger Agreement”).
Pursuant to Section 5.7 of the Merger Agreement, BlueLine is prepared to enter into a confidentiality agreement and participate in discussions with the Company’s Board and management regarding submitting a written proposal relating to a proposed transaction. BlueLine believes its proposal will qualify as a “Superior Proposal,” as such term is defined in the Merger Agreement and that it is in the best interests of the Company and its stockholders to provide additional information to BlueLine and to fully explore this opportunity.
Please provide a form of confidentiality agreement at your earliest convenience. BlueLine is prepared to move quickly and looks forward to discussing a possible transaction with you.
Very truly yours.
Timothy P. Bacci
Managing Director
A Copy of Company's E-Mail Response:
Dear Mr. Bacci:
On behalf of Docucorp’s board of directors, I am responding to your December 12 letter, a copy of which has been forwarded to me by Mike Andereck. If you have reviewed a copy of the Merger Agreement, and in particular Section 5.7 thereof, you will understand that Docucorp is contractually prohibited from responding further to your letter.
Very truly yours,
Bruce H. Hallett
Hallett & Perrin, P.C.
Labels: BlueLine Capital, DOCC, Docucorp International
In an amended 13D filing after the close Friday on Sonic Innovations Inc. (Nasdaq: SNCI), BlueLine Capital disclosed a 4.6% stake (1.2 million shares) in the company. This is down from the 5.4% stake the firm disclosed in the original 13D filing in May of 2006. In the original 13D filing, BlueLine Capital showed a $4.50 per share cost basis for a majority of their position. The new filings shows they were selling in the $7 range.
