Local.com Sells Stock For Financing
Local.com is $13 million richer, but the money was not so much a gift as a payment – Local.com sold about 2.4 million shares of its stock to two investors. And those investors bought the shares at $5.50 apiece, even though the stock’s current price has only ranged between $5.70 and $7.60 over the past few days.
I am not, of course, implying that anything illegal occurred here – Local.com put out a press release on the matter that explains all the relevant details. Furthermore, I have no desire to jump to conclusions after the mistakes that were made concerning the Hearst sell-off. This move does seem odd, though, to a “financially inexperienced” person like me.
In any event, the release explains, “The gross proceeds . . . are expected to be used for acquisitions, to expand direct sales channel development, to protect the company’s growing intellectual property portfolio, and for general working capital.”
Then there’s a statement saying, “In connection with the sale of common stock the company also issued to the investors warrants to purchase up to 471,386 additional shares of the company’s common stock at a price of $7.89, exercisable beginning February 1, 2008 and for a period of five years thereafter; and up to 471,386 additional shares of the company’s common stock at a price of $9.26, exercisable beginning February 1, 2008 and for a period of six years thereafter.”