Semiconductor solutions provider TranSwitch Corporation recently announced that it has entered into an agreement with Ilex Partners, LLC to sell approximately 9.8 million common shares for $2.5 million.
As per the deal, Ilex Partners will trade off the warrant to purchase stock for an additional 0.9 million shares of TranSwitch. Moreover, TranSwitch has granted IIex the right to purchase 9.8 million more shares for an additional $2.5 million.
TranSwitch will utilize the funds to fulfill its financial obligations. The company recently reported second-quarter 2013 net loss of $3.8 million or 8 cents per share. In addition, TranSwitch currently has an outstanding bank debt of $1.7 million, with total current liabilities of $14.4 million.
TranSwitch’s poor financial health and its failure to comply with the listing norms of Nasdaq Capital Market prompted it to recently declare its plan of delisting its shares from Nasdaq. The company does not have the minimum closing bid price and stockholders’ equity requirements for sustained listing on the Nasdaq Capital Market.
The recent private placement will likely offer some relief to the company and help in de-levering part of its financial debts.
TranSwitch provides innovative integrated circuit (IC) and intellectual property (IP) solutions, which help the customer and network infrastructure segment in delivering core functionality for video, voice and data communication equipments.
TranSwitch currently carries a Zacks Rank #3 (Hold). Better-placed stocks in the same industry that are worth considering include Advanced Semiconductor Engineering Inc. (ASX - Snapshot Report), ARM Holdings plc (ARMH - Snapshot Report) and Diodes Inc. (DIOD - Snapshot Report). All of them have a Zacks Rank #2 (Buy).