2005-11-17 / Business
Homestore, Inc. gets $100-million investment
Elevation Partners, a private equity firm, announced it will invest $100 million in Homestore, Inc. (NASDAQ: HOMS), the Westlake Village-based provider of real estate media and technology.
Fred Anderson and Roger McNamee, managing directors and cofounders of Elevation Partners, will join Homestore’s board of directors, increasing the number of directors from eight to 10.
The $100-million investment comes in the form of convertible preferred stock. The stock is convertible into shares of Homestore’s common stock at $4.20 per share, or about 18 percent above the Nov. 4 closing price. Shares surged on the announcement.
If converted, the investment would represent about 14 percent of Homestore’s outstanding shares. Company officials said they intend to use the net proceeds for general corporate purposes, including strategic growth initiatives and acquisitions.
“This new capital will help ensure that our customers have access to the highest value, most effective marketing solutions available anywhere,” said Mike Long, Homestore chief executive officer.
Over the past 52 weeks, the company’s shares have traded between $1.65 and $4.64.
In the third quarter, Homestore posted a 21 percent increase in total revenue to $66.3 million from $54.8 million in the same period last year. Net income for the quarter moved into the black as the company reported earnings of $1.9 million, or $0.01 per share, compared to a net loss of $4.6 million, or $0.03 per share for the third quarter of 2004.