Things were looking pretty bad for Palm (NSDQ: PALM), which started running out of cash, right before it was about to release a new operating system which they believe will help them compete in today’s world of advanced smartphones. But today they got a break by announcing that Elevation Partners has agreed to make an additional $100 million equity investment in the company. The company’s stock is trading 80 cents higher, or 32.5 percent, to $3.30 a share this morning.

SEE ALSO: Earnings: Palm CEO Calls Q2 “An Undeniably Difficult Period”

Elevation will acquire newly issued preferred stock that is convertible into Palm common stock at a price of $3.25 per share, a 31 percent premium to the closing price of Palm’s stock on Dec. 19. Elevation will also receive warrants to acquire 7 million shares of Palm common stock at the same price. Prior to March 31, 2009, Palm can elect to cause Elevation to sell up to $49 million of this new investment to other investors on the same or better terms than on which Elevation invested. Roger McNamee, co-founder of Elevation Partners along with Bono and others, said: “We believe that Palm is in a position to transform the cell phone industry, and we are pleased to have the opportunity to make this additional investment in the company.”

Palm’s CEO Ed Colligan, who has been very blunt about the company’s distressed state, said: “The additional capital from Elevation Partners will enable us to put added momentum behind the new product introductions scheduled for 2009 and will provide us with enhanced stability in unsettled economic times.” Release.