InPhonic Gets Goldman Financing

The $100 million loan will be used to buy back stock or retire debt.
Publish date:

Updated from 2:10 p.m. (EDT)

Goldman Sachs

(GS) - Get Report

keeps showing the love to



, the money-losing operator of the Wirefly online handset-sales site.

The big Wall Street firm,

which this summer amassed a 14% equity stake in the Washington, D.C., company, is now offering to provide the wireless-services company with $100 million in financing. The proposed financing would carry a 9% interest tab.

In a regulatory filing, Goldman Sachs says it offered the deal to InPhonic to permit it to either pay down some of its existing debt or to fund a share buyback plan. InPhonic issued a statement saying: "Although the loan has not been finalized and certain terms remain to be negotiated, we believe this new alliance combines both a great relationship with Goldman Sachs and the funding for InPhonic's growth and strategic initiativess.''

Still, the news of Goldman Sachs' continuing interest in InPhonic gave a jolt to the tiny company's shares. Shares were up $1.05, or nearly 13%, to $9.24. Shares of InPhonic have risen nearly $3 since Goldman Sachs began putting together its 5-million-share position in the company.

In the filing, Goldman Sachs says its stake in InPhonic is unchanged.

If InPhonic takes up the offer, Goldman Sachs would get warrants to purchase up to $10 million worth of shares of the wireless-services company. The average price of those shares to be purchased cannot fall below $8.

The warrants, which are essentially an option to buy shares, "would be exercisable immediately and would expire upon the fifth anniversary of the closing of the financing."

Goldman Sachs ranks second among InPhonic shareholders, right behind Technology Crossover Management. That Silicon Valley venture capital firm owns a 15% equity stake and was an early investor in InPhonic, which went public in November 2004.