OAKLAND, Calif. (AP) -- Internet radio giant Pandora Media Inc. said Monday it will issue new shares in a move that could raise three times as much investor cash as its initial public offering two years ago. The move will refresh the company's dwindling cash reserves and give it more flexibility to invest or make acquisitions as it settles under its new CEO.
Investors panned the move, in part because it will dilute any profits for existing shareholders. Shares fell $1.14, or 4.8 percent, to $22.85 in after-hours trading Monday. The stock has more than doubled in the year to date.
The new share offering comes just days after the company said last Wednesday that former aQuantive head Brian McAndrews is its new chief executive, replacing Joe Kennedy, who is retiring.
The offering will be for 10 million shares, plus an extra allotment of 2.1 million shares if there is excess demand. Its largest stockholder, Crosslink Capital Inc., will also sell another 4 million shares, reducing its stake from 16.5 percent to 13.4 percent.
The company estimates it will net up to $279.4 million -- triple the $91.7 million it raised in its IPO in June 2011.
The new share offering could increase the existing share count of 176.2 million shares by about 7 percent.
Pandora said in a statement it will use the proceeds from the new share sale for general corporate purposes, working capital, or the potential acquisition of businesses, products or technologies, although it said it has "no current agreements or understandings" about any acquisition.
It won't receive any proceeds from the sale of shares by Crosslink.
Pandora's cash and short-term investments fell to $68.9 million at the end of July, down from $89.0 million at the end of January.
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