Mentor Sold to ITC Learning Corp.

Mentor Networks has been sold. The interactive training software company has been purchased by Virginia-based ITC Learning Corp. for $3 million cash and a royalty agreement that could mean another $1.6 million for provincial coffers.

"This is the best outcome for the company, its employees and Nova Scotia taxpayers," said Manning MacDonald, Minister of Economic Development and Tourism. "This agreement will preserve these high-paying jobs here in Nova Scotia and give the company the chance it deserves to grow."

Last month, the provincial government appointed a receiver to sell Mentor Networks. More than 100 companies were contacted, and the ITC proposal was chosen by the private-sector board of Economic Development and Tourism's Business Development Corp.

"ITC is well established in the training software industry," said Mr. MacDonald. "It knows the business and it's investing heavily in selling its products, including Mentor titles."

Mentor will become part of ITC Canada and continue to operate from its Halifax offices. Virtually all 50 employees are expected to keep their jobs.

"We are very pleased to have been able to transform a negative situation into this positive outcome," said Carl Stevens, president and CEO of ITC. "We've been working with Mentor since last year and we know the products well. These are quality products that represent a significant opportunity in the PC skills and professional skills training market."

ITC is publicly owned and traded on the NASDAQ and has offices in London, the Australian cities of Melbourne and Sydney, Grand Rapids, Mich., and Atlanta, Ga., Toronto, and now Halifax. Its head office is in Herndon, Va.

In addition to the cash and royalty agreement payments, ITC will also provide the province with access to 153 of its technical training programs for use in Nova Scotia schools for two years, for the cost of shipping and duplicating.

ITC is expected to take control of Mentor by the end of this month.

sab Aug. 24, 1998 3:40 p.m.

Aug. 26, 1998, Letter to the Editor from Manning MacDonald Minister, Economic Development and Tourism

I would like to respond to certain misconceptions which seem to exist around the sale of the assets of Mentor Networks to ITC Learning Corporation.
Since we appointed a receiver a month ago, contact was made with well over a hundred potential buyers. There was a lot of interest: after all, Mentor has developed excellent training software packages during the last couple of years. Some suitors wanted to scoop up the products and move the operation out of the province. Others wanted the government to increase its investment in the operation. When the deadline arrived, the proposal from ITC proved to be the best offer, in terms of financial return to the taxpayer and economic benefit to the province.
This was not only the best deal, it's a very good deal for Nova Scotia.
ITC will pay the Province up to $4.6 million for the Mentor assets: we'll get a million right away, another $2 million paid over five years, and up to $1.6 million in royalty payments, (which means the Province gets a small cut from every sale of Mentor product over the five year term of the loan). ITC is also giving the Province use of 153 of its technical training programs for use in Nova Scotia schools, for two years, at next to no cost.
This deal means the Province has a million dollars less in the Mentor operation than it did before.
A lot of fuss is being made about the $2 million that ITC will pay over time. This is not new money that the Province is loaning out ITC is, in effect, taking over part of the existing debt owed to the provincial government. And this loan is guaranteed by the parent company, so it's a safer bet.
This arrangement works for the company, and it works for the Province.
By paying off this $2 million over time, instead of giving the money to the Province all at once, ITC is able to invest more operating cash into the operation. That's important. The software industry is labour and cash-intensive it takes money to make money. And we want this company to succeed.
The loan also gives the Province security in the company, which means we will continue to have a say in what it does. And we'll be collecting interest on the loan.
ITC has been in the training software business for twenty years. It is a company of truly international scope, with 5,000 organizational clients around the world and offices in the UK and the Pacific Rim, as well as Toronto and the United States. ITC has recently restructured to strengthen its international sales effort and position itself for stronger growth. The company knows and believes in Mentor products and its employees, and it has demonstrated a commitment to growing its Canadian operation from Nova Scotia.
This deal preserves 50 excellent, high-paying jobs and gives the Mentor operation a new lease on life.