CompuSave Says It Has OK for Rights Offering

CompuSave Corp., the troubled Irvine video machine maker, said Monday that it has received approval from the U.S. Securities and Exchange Commission to proceed with its planned rights offering, a sale that could raise as much as $5 million for the cash-strapped company to use to repay debts and stay in business.

The company said that it will sell rights that would give existing shareholders the opportunity to purchase a new class of preferred stock and common stock warrants. The company said it hopes to sell 660,000 units consisting of one share of preferred and one warrant to buy, at $1 per share, three shares of common stock. The price of each unit is $7.75.

CompuSave stock closed at $1.25 Monday, unchanged for the day.

The rights offering is CompuSave’s latest effort to reverse its slide and regenerate what was once a promising business with an exciting video technology. Three years ago, when it was founded, the company said it would build and sell electronic video machines that would allow shoppers to order discounted merchandise for mail order shipment.

However, about six months after going into full production with its product, the company was forced to shut down its electronic retailing operations and find another use for its novel machinery. The company said merchandise orders through the machines were disappointing, thereby hampering sales of new machines.

Late last year, the company started selling its machines to a video advertisement producer in Irvine for use as in-store promotions for do-it-yourself chains. However, that contract was canceled last month by the video producer.

CompuSave is underwriting this latest public offering itself.