xG Technology will use funds for working capital and product development.
SARASOTA — The parent company of xG Technology plans to invest at least an additional $5 million into the business.
The parent company, Sarasota-based MB Technology Holdings LLC, made the investment to strengthen xG's balance sheet and demonstrate its long-term support to the business, according to a release. xG Technology markets and sells a patented system that provides inexpensive Internet-based cell phone calls.
The holding company, according to the release, has committed $5 million to anchor a bridge loan of up to $10 million. The loan will be repaid out of future equity financings.
A bridge loan is traditionally short-term financing that usually has higher interest rates. The xG loan is for one year at 20% interest, the release states. The purpose of loan, the statement adds, is for working capital and product development. The loan will also be used to refinance advances MB Technology Holdings made to the company in May 2011.
xG Technology, which currently trades on the London Stock Exchange, announced earlier this month that it submitted a first draft registration statement to the Securities and Exchange Commission for an IPO. The stock would be listed on the Nasdaq exchange. Click here for that story.