Finance

TUI University

Alexander R. Figueroa

Module 5

Equity and Debt

Finance 301

Dr. John Halstead

22 June 2010

Alexander R. Figueroa
Dr. John Halstead
Finance 301
22 June 2010

I.   American Superconductor management and board of directors made the decision to forgo a secured debt financing and to adopt an equity financing strategy under current market conditions was in the best interests of their shareholders.

II.

• AMSC decision to take on equity financing

• Advantages and disadvantages for AMSC to forgo their debt financing

    • In Favor of or against AMSC decision

III. In conclusion, the management and board of directors of American Superconductor made the right decision to adopt an equity financing strategy versus forgoing a secured debt financing.

American Superconductor management and board of directors made the decision to forgo a secured debt financing and to adopt an equity financing strategy under current market conditions was in the best interests of their shareholders and company. There company could raise more money than a conventional could ever provide.
Gregory J. Yurek, chief executive officer of AMSC stated that there were three factors for the decision made. First, AMSC has picked up revenue momentum and is on track toward achieving its target of $45 million to $50 million in revenue this year, more than doubling revenue of fiscal 2003. Secondly, AMSC's high temperature superconductor motor and generator business unit, which is working on a large U.S. Navy contract, was profitable in the first quarter ended June 30, one quarter ahead of expectations. Finally, the Northeast blackout "shined a lot of light on the problems we have been talking about as a company for three to four years," Mr. Yurek said. AMSC products, such as a system installed this year in the aging Connecticut grid and high temperature superconductor power cables and other devices bought by China for its grid, are designed to improve... [continues]

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