Palm aims to raise capital for Pre launch
Published: 10 Mar 2009 08:13 GMT
Palm announced on Monday plans to offer up a bundle of stock, as it seeks to raise capital for the launch of its highly anticipated Pre smartphone.
The handheld device maker, depending on market conditions, plans to offer 18.5 million shares in a secondary offering between now and 31 March, a Palm spokeswoman said.
Proceeds from the sale will be used to repay $49m (£35m) to its investor Elevation Partners, with the remainder going towards working capital for the launch of the Pre and future product development.
With Palm currently trading at $6.38 a share, the offering would be valued at $118m if it were to go out today, with Palm collecting more than half for its Pre efforts.
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The plans for the follow-on offering stem from an agreement Palm and Elevation struck late last year.
Under the arrangement, Elevation Partners invested $100m in Palm and allowed the handset maker to have the freedom to force it to re-market 49 percent of its Palm shares that were tied to its series C preferred stock and warrants. But Palm has to exercise its rights to do so by 31 March.
Prior to Elevation's announcement, Palm's stock had been trading in the $1.50 to $2 a share range for much of December.
Credit: Palm seeks to raise money for Pre launch from CNET News
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