Eden Prairie's iMedia hopes to raise $20M in stock offering

IMedia Brands, parent company of home shopping network and multichannel retailer ShopHQ, is conducting a secondary stock offering to raise about $20 million.

The Eden Prairie-based company earlier this month also announced an agreement to create a new joint venture with a company controlled by Invicta Media Investments, which is the largest shareholder of iMedia and whose principals sit on the iMedia board. The joint venture operates TheCloseout.com, a site for discontinued and deeply discounted items.

The company plans to offer 2,860,000 shares at $7 per share. The deal is being underwritten by Minneapolis-based Craig-Hallum Capital Group and it has an option to sell an additional 429,000 shares.

The gross proceeds of the offering are expected to be $20 million. The filings with the Securities and Exchange Commission say proceeds of the offering will be used for “working capital and general corporate purposes.”

In December, the company completed a 10-for-1 reverse stock split to raise its share price. The stock was trading under $1 per share and the company did the maneuver in order to regain compliance with the Nasdaq stock exchange’s continued listing standards.

The company reported its third quarter results for the period ended Oct. 31 on Nov. 24 when it reported quarterly sales of $109 million, down 5% from the same quarter the previous year. It was the company’s ninth consecutive period of quarter-over-quarter revenue declines; it has had only one profitable quarter in that time.

On the third quarter earnings call Chief Executive Timothy Peterman pointed to more encouraging metrics, including that the 5% quarterly sales decline was the smallest in nearly two years and that its gross margins had improved.

Shares of iMedia closed at $7.70 per share Thursday, down 13%. Shares closed Wednesday at $8.85 per share, before the company released the $7 price per share of the secondary stock offering.

Patrick Kennedy • 612-673-7926