Dov Moran, founder of cell phone developer Modu, held an urgent conference cal this evening with reporters and analysts. "We did not succeed in the process of raising money in Tel Aviv. We are going to inform most of our employees of the termination of their employment. The process is sad; we still believe the company has huge potential."
Moran added: "This is not the end of Modu. We will try to raise money from other sources of capital. The company will continue to sell its products. I regret that raising money on the stock exchange is interpreted as an automatic exit. It saddens me that the approach on the Israeli capital market is that capital raising for high-tech companies should take place on other stock exchanges.
"We did not manage to persuade people that Modu has great potential, and that hurts a lot. It's my failure."
Modu currently employs about 130 people, most of whom, as mentioned, will now be laid off.
Modu tried to issue shares. A document circulated last Thursday by Clal Finance Underwriting, one of the underwriters of the offering, showed that it attempted to raise up to NIS 145 million ($40 million) in capital and debt, at a valuation of NIS 333 million before money ($91 million), a much lower valuation than that at which it held its latest equity rounds.
Modu, which was founded three-and-a-half years ago, develops modular cellular telephones. It produces two telephones, the main one being "Modu T", and the second a Wi-Fi-based telephone called "Modu W". Modu strives to differentiate its products with their light weight and compact size, and, no less importantly, their low price.
The company has raised $124 million to date - $104 million in equity investment and $20 million in convertible loans. The company was about to make an official launch of its "Modu T" product.
As far as its Tel Aviv IPO was concerned, the company intended to raise half the planned amount in an equity offering and half in debt. It planned to issue up to 13.3 million shares at NIS 5.46 per share, giving a total of NIS 73 million, and to raise a similar maximum amount in an issue of convertible bonds.
Published by Globes [online], Israel business news - www.globes-online.com - on November 18, 2010
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