Sound chip manufacturer Aureal Semiconductor Inc. has completed a $20 million stock subscription rights offering, the first step in an eventual listing on the NASDAQ stock exchange.
The sale of 33.3 million shares to existing Aureal shareholders was completed on May 21, according to the company.
Aureal executives said this was the first step in a plan to restructure the company's financial framework, providing additional liquidity and capital for future growth. Aureal's next step is a 15:1 reverse stock split, a move that should boost the company's share price to about $9 and convince NASDAQ exchange officials to list the stock, a company spokeswoman said.
"We're pleased to be on track with the restructuring process to date," said David Domeier, Aureal's senior vice president of finance and chief financial officer, in a statement. "Now that the rights offering has been successfully completed and our application to NASDAQ has been submitted, we look forward to the next steps of executing the reverse stock split and NASDAQ completing their review. We have received shareholder support for our program and feel confident that it will bring us closer to achieving our objectives for the restructuring program."
Approximately 60% of Aureal's stock is owned by Oaktree Capital Management LLC, an investment firm in Los Angeles. Richard Masson, a director with ties to both Oaktree and another large shareholder, Los Angeles-based The TCW Group Inc., controls approximately 59% of the voting stock and as such will dictate the company's direction, including mergers and acquisitions, according to Aureal's filings with the Securities and Exchange Commission. Under the company's Delaware charter, however, no merger may be approved unless two-thirds of the minority shareholders agree to the transaction.
The subscription offer allowed shareholders to purchase one new share for every two shares they owned, at about $0.60 per share, a spokeswoman for the Fremont, Calif.-based supplier said. The period to exercise the option was limited to one month.
Aureal lost $3 million on sales of $12.6 million for the first quarter 1999 ended April 4, a 250% increase in sales from a year ago when the company reported a wider loss of $5.5 million.