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Image Raises $15M+ in Funding Through Private Sale of Stock

21 Dec, 2004 By: Erik Gruenwedel

As expected, Image Entertainment today said it has raised $15.25 million in funding through the private sale of approximately 2.9 million shares of common stock at $5.25 per share to a group of institutional investors.

The unidentified eight investors also received warrants to purchase up to 726,189 additional shares of Image common stock at $6.56 per share, according to a filing with the Securities Exchange Commission.

Chatsworth, Calif.-based Image said it would use the funds to pay down outstanding debt and as working capital, including content acquisition.

“This private placement significantly strengthens Image's balance sheet and allows us to take advantage of new production and program acquisition opportunities,” said Jeff Framer, Image CFO.

The company said it distributes 13 percent of the music DVD market, 7 percent of special interest fare and 7 percent of TV DVD.

With its microcap status (less than $300 million in stock value) and the resulting limited universe of institutional investors willing to take notice of the company, Image in October entertained investors at ThinkEquity Partners Second Annual Growth Conference in San Francisco. Framer, at the time, said Image wanted to dramatically increase the 40,000 company shares traded daily — an objective he said was largely attainable through institutional investors.

“For that [trading volume], you need institutions to hold your stock,” said Framer. “And for them to own your stock, you have to garner institutional coverage.”

ThinkEquity Partners earned a $915,000 fee plus warrants for 2 percent of additional Image common stock for brokering the deal, according to the SEC filing.

Last month, Image reported second-quarter (ended Sept. 30) net earnings of $1.2 million, or 6 cents per diluted share, on revenue of $28.5 million, compared to a loss of $1 million, or 6 cents per diluted share, on revenue of $20.3 million during the same period last year.

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