“Gateway and eSoft have resolved a disagreement, triggered by
eSoft’s slumping stock price, about a Gateway investment in the
small Linux hardware and software company. The news yesterday sent
eSoft’s stock up 13 percent to close at $8.53, but shares sank 5
percent to $8.13 in midday trading today. The stock has been
steadily dropping since November, when excitement about the Linux
operating system carried its stock to a high of $42.87.”
“In February, when eSoft’s stock was generally trading between
$20 and $30, Gateway announced a plan to invest $25 million in
eSoft, buying about 1.3 million shares at $19.51 apiece in two
installments. Gateway made the first $12.5 million payment when the
deal closed April 26 but didn’t make the second payment within 90
days of the closing date, eSoft said in a Securities and Exchange
Commission filing.”
“Negotiations have resulted in a revised agreement, the
companies said. In it, Gateway will provide the $12.5 million
as a four-year loan convertible to eSoft stock. In addition, eSoft
will purchase 30,000 shares of Gateway stock for $3 million, and
the companies agreed to expand their sales, marketing and
distribution agreement.”