i-flex may back out from Castek deal
By agencies   |   Wednesday, 08 June 2005, 19:30 IST
Printer Print Email Email
KOLKATA: Banking and financial solutions product major, i-flex Solutions Ltd could back out from exercising the option of buying 34 percent stake in crisis-stricken Canadian property and casualty insurance company, Castek Software Inc. "We might back out from buying 34 percent of the stake in the Canadian company unless it turns around within the next 18 months," a top company official said. The official, however, said, "With our technical support, we hope that the company will make a turnaround." The buyout of 34 percent shareholding would make i-flex the single largest shareholder in the Canadian company. i-flex had recently signed an agreement with Castek that allows it to buy up to 34 percent of its stake. "The turnaround of Castek is directly dependent on two pending contract negotiations with two U.S. based large insurance companies. If Castek wins those contracts, which are under progress, the company will come out of the crisis," the official added. i-flex officials said the valuation of Castek would jump manifold if it gets the insurance deals. "The option is similar to exchange traded derivative instrument-options. We paid a premium to get the right to buy up to 34 percent over the next 18 months but are not obligated to exercise the option," the official said. i-flex, in its bid to enter the insurance sector, wanted to seal a deal without involving itself with any significant risk by buying the shares upfront. Castek Sotware Inc was formed after merger of Castek Inc and Castek Software Factory Inc as part of a corporate restructuring. Castek had raised over $43 million in its series B and C rounds of financing since 2001. There are several venture capitalists shareholders who offered capital infusion in the past.

siliconindia