Cash-hungry Palm ( PALM) seeks to raise about $49 million from the resale of 18.5 million shares held by its investment partner Elevation Partners.

The move, announced in a filing Monday, calls for Elevation to sell 49% of its recent $100 million investment in Palm. Elevation received 100 million units of preferred stock and warrants in December, when it stepped up its investment in the Sunnyvale, Calif., smartphone maker.

Palm says it expects Elevation to use the proceeds to buy the common stock through the public offering.

To date, Elevation has invested $425 million in Palm in an effort to bring the tech shop back from the brink of collapse and regain its leadership position in smartphones. The efforts have delivered in the form of a well-received touch-screen Palm Pre phone. The prospect of a successful device, to be sold exclusively by Sprint ( S), has helped push the stock up 100% this year.

The Palm Pre is expected to compete with Apple's ( AAPL) popular iPhone, sold by AT&T ( T) and the Research In Motion ( RIMM) BlackBerry Storm, sold by Verizon ( VZ).

News of a new public offering however, threatens to dilute the number of outstanding shares. Palm's stock was down half a dollar, or 8% to $5.65 in pre-market trading Monday.

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