Investor hands Palm $50m
Published: 07 Dec 2001 17:10 GMT
Palm said on Friday that an unnamed investor has provided $50m in financing to help fund Palm's wireless and corporate sales efforts.
The investment is convertible into Palm shares at a price of $4.63 per share, which the company said is 130 percent of the average price of Palm shares in the five days prior to the closing of the deal. Palm may force a conversion of the bond at any time after a year, provided its shares have traded above $7.13 for some period of time. The note has a five-year term and a 5 percent interest rate.
"This capital commitment demonstrates a high level of external confidence in Palm," Palm chairman Eric Benhamou said in a statement on Friday. Benhamou is also the company's interim chief executive, having replaced Carl Yankowski last month.
Palm has said it plans to hire additional workers in the corporate sales area, even as it is scaling back in other areas. The company said last week that it was cutting 250 jobs, but actually laid off more than that number to offset the hiring in other areas.
The company is also in the process of creating a separate subsidiary for its operating system business. Last month, Benhamou told CNET News.com that the company would look to start the process of creating two separate publicly traded companies early next year.
"We're moving ahead on our strategic objectives -- returning to profitability, executing on our enterprise strategy and delivering an ARM-based set of solutions to the marketplace," Benhamou said in the statement.
In early trading on Friday, Palm shares were at $3.66, essentially unchanged from Thursday's closing price.
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