Palm’s upcoming Pre may be its ticket to resurgence in the smartphone market, but as the months tick by to its launch, the cash-strapped company has been grasping to survive. On Monday, it executed another move to generate cash by remarketing 18.5 million common shares originally acquired by the investment firm Elevation Partners back in January.
Under the conditions of the remarketing, Elevation will recoup the $49 million originally paid for the shares, and Palm will receive all net proceeds above that amount. If all 18.5 million shares were to sell at Monday’s price of $6.21 per share, that would make them valued at nearly $115 million dollars, leaving $66 million leftover from the sale for Palm.
According to Palm’s press release, funds raised by the remarketing, “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.”
Elevation Partners has the right to purchase an additional 2.8 million common shares to cover over-allotments, and is expected to reinvest the $49 million from the remarketing in public shares of Palm.