After recently shrinking its outstanding shares through a reverse stock split, Towerstream Corporation (NASDAQ:TWER) is planning an equity fundraiser. In a securities filing, the company disclosed plans to offer as many as 930,000 shares with anticipated gross proceeds of nearly $3 million.
According to the filing, Towerstream Corporation (NASDAQ:TWER) will sell the common shares at $3.20 apiece. As such, the offering is expected to generate $2.98 million in gross proceeds. But the actual offering price of the stock could change because the company mentioned that the price cited was only meant for calculating amount of registration fee.
It is also not clear at this juncture whether Towerstream will grant underwriters the opportunity to purchase additional shares to cover oversubscription. The company did not also reveal what it intends to use the money from the secondary offering for, although its balance sheet reflects total debt of about $36 million.
Reverse stock split
The fundraiser comes on the heels of stock consolidation at Towerstream Corporation (NASDAQ:TWER). The company performed a 1-for-20 reverse stock split that allowed it to lift the minimum bid price of its common shares. With that, the company has eliminated the risk of being delisted from the NASDAQ Stock Market.
Towerstream Corporation (NASDAQ:TWER) had received a notice from NASDAQ that it was not in compliance with the requirement for continued listing on the stock exchange market after its stock price fell below $1.
The reverse stock split greatly reduced Towerstream’s outstanding shares to 4.5 million from more than 90 million.
What next for Towerstream Corporation (NASDAQ: TWER)?
Although the reverse stock split is a survival mechanism, it does provide support for the company’s long-term future. Continued listing on NASDAQ is important for Towerstream Corporation (NASDAQ:TWER) as it provides the company with the exposure it needs to gain the attention of large investors who can pour more money into the business. The secondary offering should also provide capital boost for the company. Towerstream finished the last quarter with $9.64 million in the bank, down from more than $15 million in the prior quarter.
Towerstream logged adjusted EPS loss of $0.08 on revenue of $6.7 million in 1Q2016.