Pandora media (NYSE: P) yesterday announced a proposal to commence a fully underwritten follow-on public offering of 10 Million shares. The company will also offer an additional 4 million shares which will be offered for sale by the current stockholders. The underwriters to the issue in addition will have a 30-day option to purchase a further 2.1 million shares.
Assuming that the issue will be fully subscribed, the company will end up raising close to $230 million from the issue, excluding the option available to the underwriters. The proposed amount to be raised is significantly large compared to the company’s last reported cash balance of $53 million with a quarterly cash outflow of $12 million for the July 2013 ending quarter. Pandora has been losing money over the last few quarters and its huge cash outflows have been reducing the cash balance available at every quarter end. The announced follow on issue will have a 5% dilutive effect on the current stock holders. According to the company statements, the proceeds from the issue will be used for general corporate purposes, and considering the significantly high amount of funds the company is attempting to raise, the market did not take kindly to the announcement. The stock dipped more than 4.5% in after-hours trade following the announcement of the follow-on offering.
To see Pandora’s latest stock price movement, click here (NYSE: P)
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