Glory Star New Media (NASDAQ:GSMG) stock is after the Chinese digital media company announced a new subscription agreement that will provide it with funding.
This new agreement allows an institutional investor in the company to buy up to 2,857,142 shares of GSMG stock. That could bring in as much as $10 million for the company and some shares are already being sold.
Glory Star New Media notes that the initial deal includes 571,428 shares that will be sold to the investor. This will have the company gaining about $2 million from the deal at the agreed-on price of $3.50 per share. This is set to take place on or around Aug. 30.
The deal between Glory Star New Media and the institutional investors doesn’t just include shares of GSMG stock. That $3.50 price per share also includes a warrant to purchase an additional share of the stock for $4.40 per share. The warrants can be used immediately and expire one year after being issued.
So what does Glory Star New Media plan to do with the funds raised from this deal? Nothing out of the ordinary. It’s just expecting to use it for working capital and other general corporate purposes.
GSM stock is seeing heavy trading on today’s news. As of this writing, more than 83 million shares of the stock have changed hands. That’s quite the jump over its daily average trading volume of about 210,000 shares.
GSMG stock was up 39.3% as of Thursday afternoon.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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