New Micro Focus director buys in

Mr Van ‘t Noordende is one of the newest members on the board, having joined in June this year. He has arrived at a troubled business, which has seen its market value shed more than three quarters so far this year. Its share price has struggled to recover from the March sell-off, having already been depressed by its disastrous acquisition of Hewlett-Packard Enterprise’s (US:HPE) software business back in 2017. 

The deal cost an eye-watering $8.8bn. Its integration was ultimately a failure, with a review conceding that the business's IT systems were simply "not fit for purpose". And the company’s fortunes have still not returned: recent trading has lagged, with revenues dropping by over a tenth in the first half of 2020. This was compounded by a painful impairment charge of $922m, which pushed the company into a $1bn pre-tax loss. Small wonder that net debt (excluding lease liabilities) more than doubled, with its net debt to adjusted cash profits ratio sitting at a multiple of 3.3. 

It is somewhat encouraging then that Micro Focus has managed to secure an extension for its $350m revolving credit facility to June 2024. The company now has no maturity dates before then, which should give it some time to review its borrowing. Total liquidity stands at around $1.05bn. 

In a sign of growing management confidence, last month non-executive chairman Greg Lock and his wife added to their stake in the company, increasing their combined position by around a fifth.