U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549NOTICE OF EXEMPT SOLICITATION
Submitted pursuant to Rule 14a-6(g)
1. Name of the Registrant: Borland Software Corporation
2. Name of Persons Relying on Exemption:
C. Robert Coates
3. Address of Persons Relying on Exemption:
4. Written Materials. The following materials are attached:
-Informative letter from Mr. Coates regarding Borland Software Corporation.
-Letter From Borland Software Corporation's attorneys to Mr. Coates.
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SOURCE: C. Robert Coates
Borland's Board Rejects $150 Million Offer by Robert Coates for Legacy Products
DALLAS, September 21,2005 -- Robert Coates, a former director and major
shareholder in Borland Software Corporation (NASDAQ: BORL), announced today that
the Borland Board of Directors has summarily rejected his proposal for a
$150,000,000 all cash purchase of the company's Delphi and Deploy assets.
The Borland Board rejected the offer without any discussion with Mr. Coates of
its merits, without requesting any details of the proposed transaction, and
without any counter offer or effort to negotiate a more favorable transaction.
Mr. Coates believes that this demonstrates again that the interests of the
Borland shareholders are not foremost in the Board's mind. A copy of the
Board's terse response, communicated through their outside law firm, is
attached.
In its letter the Board says that "...Delphi and Deploy are integral to
Borland's business and growth strategy, and are not for sale." However, Mr.
Coates believes that the reality at Borland is very different. Borland has made
clear in its communications to its employees, customers and shareholders that
the future of the company lies in its ALM/SDO software, not in Delphi or Deploy.
The interim CEO is on record as saying that Delphi and Deploy are "cash cows" to
be used to fund other products. The company has recently transferred many of
its dedicated and hard working Delphi and Deploy developers, sales and support
staff to the ALM/SDO areas. The company has stopped all development on several
products in the Deploy suite and, according to company sources, plans end-of-
life announcements for these products in the near future, making it very
difficult to sell the other Deploy products in the product suite. All of this
has had a chilling effect on morale at the Delphi and Deploy groups. Several
top people have already resigned, and Mr. Coates has been informed that others
have offers for employment elsewhere.
Despite the fact that Mr. Coates' offer letter contained several key points that
would have significantly increased shareholder value and preserved the future
relationship of these products with the ALM/SDO products, the Borland Board
refused to pursue it. The offer letter stated that Borland could continue to use
the Delphi and Deploy software in the ALM/SDO products at no cost. The offer
also said that at Borland's option the transaction could be structured to
increase revenues and profits from these products for the next nine quarters
through licensing fees and cost sharing.
Mr. Coates believes that with the sale of the Delphi and Deploy assets,
Borland's Directors could have created a win-win situation, focusing the
company's management and employees on its ALM/SDO products, while using the
$150,000,000 in cash to build or buy important new features and functionality
for this product suite and/or to repurchase more shares. At the same time the
value to the ALM/SDO products derived from integration with the Delphi and
Deploy software would not have been lost and the independent growth of Delphi
and Deploy software revenues would only have increased Borland's ALM/SDO demand.
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Mr. Coates' $150 million offer is significant given the company's current
enterprise value. According to Yahoo Finance, Borland's enterprise value (its
market value plus any debt and minus its cash) is now $242 million, only $92
million more than Mr. Coates' offer for just the company's Delphi and Deploy
legacy products.
Mr. Coates said that he would submit a new offer to the Borland Board this week
for the Delphi group in order to preserve the intrinsic value of these assets
for shareholders, employees and customers and to focus Borland on driving
ALM/SDO revenues and enabling customer success. Mr. Coates' new offer would
potentially guarantee to Borland an increase in its revenues and EBITDA from
Delphi.
Contact: Christy McDonald @ cmcdonald@rcoates.com or (214) 256-5970.
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[LETTERHEAD]SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP.
Four Times Square,
NY,NY10036
#212-735-3000
VIA FACSIMILE (214-999-3645) AND FEDERAL EXPRESS
David R. Earhart, Esq.
Gardere Wynn Sewell LLP
1601 Elm Street
Dallas, Texas75201-4761
Dear Mr. Earhart:
The Board of Directors of Borland Software Corporation met earlier
today, and considered your letters dated September 7, 2005 and September 9,2005, together with the two-page draft "letter of intent" which accompanied your
September 9 letter. In your letters, you indicated that your client, C. Robert
Coates, was interested in acquiring substantially all of the assets of Borland's
Delphi Division and Deploy Group for $150 million in cash or, alternatively, in
an unspecified "structured transaction."
I have been asked by Borland's Board of Directors to advise Mr. Coates
that Delphi and Deploy are integral to Borland's business and growth strategy,
and are not for sale. The Board also has asked me to advise Mr. Coates that it
is not interested in entering into discussions with him concerning these assets
at the present time. The Board was unanimous in its views.
Please inform Mr. Coates of the Board's response as set forth above.
Very truly yours,
/s/ Daniel E. Stoller
cc: Mr. William K. Hooper,
Chairman of the Board
