Innovative integrated circuit (IC) and intellectual property (IP) solutions provider, TranSwitch Corporation ( TXCC ), recently priced an underwritten public offering of over 7 million at $0.50 per share to comply with the listing rules. Maxim Group LLC is acting as the sole manager for the offering. Investors can subscribe for this offering till Apr 3, 2013.
Each unit offered by TranSwitch consists of a share of stock and a warrant to purchase 0.50 of a share. The warrants have an exercise price of $0.58 per share, and thus can only be converted into a share when its stock price exceeds it. The company has also given a 45-day option to the underwriter to purchase additional 1.2 million units to fulfill the over allotments.
This secondary offering by TranSwitch is aimed at bringing its stockholder's equity in compliance with Nasdaq Listing Rule for continued listing in Nasdaq Capital Market. The rule requires listed companies to maintain its stockholders' equity of at least $2.5 million. However, the company reported its stockholders' equity as $1.2 million in its Feb 8, 2013 Form 8-K, filled with the SEC, which fails to comply with the listing norms.
TranSwitch expects to mobilize net proceeds of around $3.7 million (including the full exercise of the over allotment option) from this public offering, after considering underwriting discounts and projected offering expenses. The company expects to utilize the proceeds for product development, general corporate purposes and to meet its working capital needs.
Based in U.S., TranSwitch provides IC and IP solutions. These solutions help the customer and network infrastructure segment in delivering core functionality for video, voice and data communications equipment.
However, with the stock closing down around 8% on Mar 28, 2013, it seems that investors are a little skeptical about the public offer pricing of the company. Some of the other stocks in the same sector that meet the Nasdaq Listing Rule and are worth mentioning include Lattice Semicon ( LSCC ), Rambus Inc ( RMBS ), each carrying a Zacks Ranks #1(Strong Buy) and Aeroflex Holding ( ARX ) that retains a Zacks Rank #2 (Buy).