American DG Energy Inc. (NYSEMKT: ADGE) recently performed a string of transactions aimed at strengthening its balance sheet. In particular, the company eliminated a portion of its outstanding convertible notes, thus avoiding a situation that would have caused significant dilution of the stock. The management has promised to continue pursuing arrangements that would further strengthen the company’s balance sheet going forward.
American DG Energy Inc. (NYSEMKT: ADGE) removed convertible debt valued at $9.3 million. If those securities converted to equity, they would have caused a massive dilution of American’s shares, thus destroying value for existing shareholders. Therefore, the move is the latest demonstration by American’s management of its commitment to create shareholder value or at least preserve the value that is already there.
More ground to cover
But elimination of $9.2 million in debt is only the beginning. At the end of 4Q2015, American DG Energy Inc. (NYSEMKT: ADGE)’s balance sheet reflected more than $24 million in total liabilities. As such, while taking out more than $9 million in convertible notes helps strengthen the company’s balance, there is more ground to cover to completely strengthen the balance sheet.
Management recently reiterated its commitment to the course of making American’s balance sheet stronger going forward. As such, more debt reduction measures are expected in the future.
Enough funds to get planned projects moving
According to American’s CEO, John Hatsopoulos, the debt reduction has put the company in more secure financial position. While he admitted that there still remains work to do on the balance sheet, the company has enough funds to work on its planned projects and the backlog. However, handling fresh projects could be difficult at this juncture.
American DG Energy Inc. (NYSEMKT: ADGE) is scheduled to reports its 1Q2016 results before the markets open on May 13. Posted 2015 revenue of $8.56 million is down from the $8.57 million posted in the previous year. GAAP EPS loss was reported as $0.11 compared to GAAP EPS loss of $0.12 in the previous year.