Palm moves to bolster capital ahead of Pre launch
NEW YORK (Reuters) - Palm Inc will exercise its right to remarket shares held by private equity firm Elevation Partners, in an attempt to bolster its capital ahead of the launch of its new Pre smartphone.
The company said on Monday it would remarket 18.5 million common shares that underlie preferred shares and warrant units held by Elevation Partners. Based on current market prices, the shares are worth about $105 million.
Elevation will recoup the $49 million it originally paid for the units, and Palm will receive all net proceeds in excess of $49 million, the company said.
The company, which warned last week of weaker-than-expected quarterly revenue because of slower sales of older phones, has been considering such a share remarketing to prepare for the launch of the Pre in the first half of 2009.
The launch will be a crucial test for Palm as it tries to regain market share from rivals like Apple Inc's iPhone and Research in Motion Ltd's BlackBerry.
"These proceeds would be used to strengthen Palm's working capital position and to further bolster the resources Palm is devoting to the launch of the Palm Pre and future product-development efforts," it said in a statement.
Palm shares rose 4 percent to $6.41 in early trade. They had risen strongly after Palm unveiled the Pre in January, but had retraced some of the gains in recent sessions on worries about consumer spending and concerns that a later-than-planned launch of the new phone could cause liquidity concerns.
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