By Lisa Kerner
Charlotte, N.C., June 4 - Palm, Inc. said its strategic relationship with Elevation Partners and resulting recapitalization will give stockholders $9.00 per share in cash, or a total of $940 million.
Elevation, a private equity firm, will purchase $325 million of a new series of convertible preferred stock with a conversion price of $8.50 per share. The company has secured commitments for $400 million of new debt and a $40 million revolving credit facility to fund the cash distribution. JPMorgan and Morgan Stanley will be joint bookrunners for these facilities.
The recapitalization is expected to close in the third quarter of 2007 and is subject to shareholder approval. Palm's board has unanimously approved the purchase agreement.
Jon Rubinstein, former senior vice president of hardware engineering and head of the iPod division at Apple, Inc., will join Palm as executive chairman of the board following the transaction's close.
Fred Anderson and Roger McNamee, managing directors and co-founders of Elevation, will join Palm's board of directors. In addition, the total number of directors will be increased to nine from eight.
"As a result of this transaction, we will strengthen the Palm leadership team and create a more effective capital structure, which puts us in a great position to attract new talent, significantly strengthen our execution capabilities, and deliver long-term shareholder value," Palm president and chief executive officer Ed Colligan said in a company news release.
Morgan Stanley advised Palm, while Houlihan Lokey Howard & Zukin Advisory Services, Inc. provided a fairness opinion.
Palm's mobile computing products include Palm Treo smartphones and Palm handheld computers, as well as software, services and accessories. The company is based in Sunnyvale, Calif.
| Company: | Palm, Inc.
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| Investor: | Elevation Partners
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| Distribution per share: | $9.00
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| Announcement date: | June 4
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| Expected closing: | Third quarter 2007
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| Stock price for company: | Nasdaq: PALM: $16.09 on June 1
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