June 27, 2001

Late July MandrakeSoft IPO confirmed; special offering for project contributors

Author: JT Smith

- by Tina Gasperson -
Jacques Le Marois, MandrakeSoft co-founder and CEO, has confirmed the authenticity of an IPO memorandum leaked to European Linux site LinuxFrench.net. The memo was originally distributed to MandrakeSoft's employees and shareholders and was not intended for public consumption.The letter begins by explaining the reasons behind the French Linux distribution's decision to go public:

"1. Why are we conducting an IPO?

"MandrakeSoft has three choices to choose from for the future: be profitable right now; be
profitable in the short term; be profitable in the long term. The first option wouldn't require any
additional external investments, but would reduce the potential of Mandrakesoft in the Linux and
operating systems arena. The second option would require a small amount of fund raising, yet
maintain our capability to grow. The last option would require a large amount of money be
raised, but the financial markets are no longer interested in companies that only have long-term
profitability plans.

"So we have decided to pursue the middle-solution, which is to be profitable in the short term.
We feel this is the best approach as it is more realistic and involves the least amount of risk. We
will reach profitability in the near future while keeping alive our great growth potential. We
already have all the tools needed to succeed -- a strong user base, a well-known product,
and a team already in place. This solution also fits best with our recent refocus around Linux
businesses."

MandrakeSoft will make a special stock offering of 10% of the IPO release available to project contributors, stating, "MandrakeSoft's success is largely due to our community of users and contributors; therefore, we will present our main contributors a special offer ... These people will be offered the option to purchase stock as privileged investors."

According to the memorandum, the special 10% for contributors will not be available to U.S. residents and others outside of the European Union because of "regulatory issues" and the inability to "solicit foreign individual investors without filing multiple papers." However, U.S. residents and others are welcome to participate in the open market portion of the IPO.

MandrakeSoft is planning a rapid timetable to the IPO date, which is expected sometime in the second half of July. The full text of the leaked memo is available here at LinuxFrench.net.

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