LINCOLNSHIRE, Ill.-Motient Corp. closed a sale of 3.5 million shares of common stock to several institutional investors in a private placement that raised approximately $30 million in gross proceeds. The company said it plans to use proceeds from the sale to repay certain existing indebtedness and for general corporate purposes.
The stock sold at $8.57 per share that Motient noted as a 15-percent discount to the June 24 closing price of $10.09 and was part of an agreement entered into by the company June 25. As part of that agreement, Motient agreed to register the shares for resale by the investors by the end of November and issued warrants to the investors for the purchase of an additional 525,000 shares of common stock at $8.57 per share.
Last month, Motient said it used general corporate funds to facilitate negotiated settlements of its vendor financial facility and promissory note with Motorola Inc. and its capital lease with Hewlett-Packard for certain network equipment. Motient noted the full amount due and owing under those agreements was a combined $6.8 million, that it had agreed to pay a combined $3.9 million in cash and issue a warrant to Motorola to purchase 200,000 shares of common stock at $8.68 per share. A $1.1 million letter of credit issued to HP securing payments under the lease was released, and Motient said it took title to all of the leased equipment and software.
“We believe that these corporate finance transactions represent positive developments for Motient,” said Christopher Downie, executive vice president and chief operating officer at Motient. “The retirement of these debt obligations means that they will no longer encumber our assets, including our investment in MSV, our base stations and our frequencies. We think that the transactions also improve our monthly operating cash flow profile and provide us continued opportunity to drive down costs and maximize operating efficiencies.”
