Semiconductor solutions provider TranSwitch Corporation recently sealed a deal with Michael Steinhardt of Ilex Partners, LLC to sell approximately 9.8 million shares for $2.5 million.
The private placement will likely offer some relief to the company. TranSwitch will utilize the funds for general corporate and working capital purposes. Moreover, TranSwitch is expected to utilize the funds for the growth of its new video connectivity business without drawing additional debt.
Furthermore, according to the deal, Ilex Partners will trade off the warrant to purchase an additional 0.9 million shares of TranSwitch. TranSwitch has also granted IIex the right to purchase 9.8 million more shares for an additional $2.5 million.
TranSwitch’s poor financial health and its failure to comply with the listing norms of Nasdaq Capital Market prompted it to consider a 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 company recently announced its collaboration with Rancore Technologies, the technology and development arm of Reliance Jio Infocomm Limited (RJIL), which in turn is a subsidiary of Reliance Industries Limited (RIL), to support the launch of 4G Broadband Wireless and Wireline Access (BWA) services in India.
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 #4 (Sell). 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 these have a Zacks Rank #2 (Buy).