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.
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,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.