Three Peregrine Board Members, Chairman Resign
Peregrine Systems Inc. Chairman John J. Moores and three other members of the besieged software maker’s five-member board said Tuesday that they will resign this week in a deal aimed at clearing the air with distrustful creditors and moving the firm’s bankruptcy reorganization along.
Moores -- owner of the San Diego Padres and self-professed computer nerd who built Peregrine into a corporate powerhouse -- and the outside directors will step down Friday, when the firm also is supposed to submit audited financial statements for 2000, 2001 and 2002 to U.S. Bankruptcy Court.
Peregrine filed for bankruptcy protection in September.
An attorney in the case hailed the move as a significant step for creditors, who have been fighting in recent months to replace Moores and the other board members with an independent trustee. Creditors believed that Moores and the others were too closely tied to accounting irregularities and had become distracted by the potential for personal liability stemming from dozens of investor lawsuits, the attorney said.
The creditors “perceived the existing directors as being part of the problem rather than part of the solution,” said Los Angeles attorney Bruce Bennett. He contended that the creditors committee, which dropped demands for the trustee in exchange for the resignations, had problems getting basic information from the board.
Peregrine attorney Rich Pachulski said Moores and the others always intended to step down when the formal reorganization plan was filed in the next four to six months. But they voted during a conference call Monday to leave sooner to “resolve a whole set of issues that had impeded the case,” he said.
Moores said Tuesday that with the disclosure of new financial statements “the existing board’s job will be done.”
Moores’ departure will be his second as Peregrine chairman. After serving 10 years at the helm during Peregrine’s heyday, Moores left in 2000 only to be called back in May after the San Diego company’s accounting scandal broke.
Peregrine has acknowledged overstating revenue by at least $250 million from April 1999 to December 2001. Federal prosecutors and the Securities and Exchange Commission are investigating. A former assistant treasurer for the company pleaded guilty last year to bank fraud charges and prosecutors say they will file more cases.
Moores’ return, however, only fanned the controversy. Records show that many of the accounting irregularities occurred during the last 16 months of Moores’ initial tenure. During that time, he sold nearly $371 million in Peregrine stock. Angry investors have named Moores in lawsuits alleging insider trading, fraud and mismanagement.
Moores’ decision to step down ahead of schedule gives legal traction to the investors, said Michael Aguirre, an attorney for one shareholder group that has sued. He said the directors’ departure was the only way to conduct a thorough investigation with any confidence.
“I don’t know that it’s an admission of guilt, but it strengthens the hands of the plaintiffs and weakens the hands of the defendants,” he said. “It’s like a sand castle that’s starting to give way as the tide rolls in.”
Along with Moores, Peregrine board members Christopher Cole, Charles E. Noell III and Thomas G. Watrous will resign Friday, according to the company. Peregrine Chief Executive Gary Greenfield will remain on the board and Thomas Weatherford, former senior executive at San Jose-based software firm Business Objects, will be appointed to a vacant position.
The men will select three new board members, according to the agreement.
Peregrine’s woes have no bearing on the Padres’ finances or its $150-million pledge to help pay for a new ballpark, say those involved with the project.
Peregrine shares, which at one time sold for $80, rose 8 cents to 37 cents in over-the-counter trading Tuesday.
