Blog Post

Cash-Strapped Phorm Sells A Fifth Of Itself To Keep Afloat

imageThere’s only so long Phorm can carry on without any confirmed customers to give it income. Now, just a year after placing shares worth £32 million, it’s looking to sell 19.4 percent of the company through a new share offering for £15 million as it tries to stay afloat.

The company publishes its 2008 earnings on Thursday, June 18, and they’re likely to show continued high investment and staff costs – but, with no confirmed custom yet from its BT (NYSE: BT) or SK trialists and with both TalkTalk and Virgin Media (NSDQ: VMED) hesitating, few actual sales. Phorm also operates from expensive central London. In 2007, it burned through $22.4 million cash and made a $32.8 million loss.

The company’s statement says: “Phorm intends to use the proceeds from the placing to continue the implementation of its service in the UK and Korean markets, and for general working capital purposes, as the company continues its discussions with other ISPs both in the UK and internationally.”

The new shares value the company cheaper than the March 2008 offering – it’s 3.3 million shares at £4.50 each, compared with 1.61 million at £20 each a year ago. CEO Kent Ertugrul, in the statement, called last week’s rebrand of its core offering as “Discover” a “successful launch” (though there are no customers yet) and said the share offering is “substantially over-subscribed”.