NEWS
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 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 per 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.
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 remarket 49 per cent 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.
