Palm seeks to raise money for Pre launch
Company plans to offer 18.5 million shares in a follow-on offering, in a move to pay back investor Elevation Partners and raise capital for smartphone launch.
Palm announced 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 March 31, a Palm spokeswoman said.
Proceeds from the sale will be used to repay $49 million to its investor Elevation Partners, with the remainder going toward 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 $118 million if it were to go out today with Palm collecting more than half for its Pre efforts.
The plans for the follow-on offering stem from an agreement Palm and Elevation struck late last year.
Under the arrangement, Elevation Partners invested $100 million 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 March 31.
Prior to Elevation's announcement, Palm's stock had been trading in the $1.50 to $2 a share range for much of December.
