Part 2: Equity and Debt
Read the article below available in ProQuest:
American Superconductor switch; Westboro company
plans to raise money through a stock offering, Andi
Esposito. Telegram & Gazette. Worcester, Mass.: Aug 26,
2003. pg. E.1
Abstract (Article Summary)
"AMSC"s management and board of directors believe the
XXXXXXXX XX XXXXX a secured debt XXXXXXXXX XXX to XXXXX an
XXXXXX XXXXXXXXX strategy under XXXXXXX XXXXXX conditions XX in
XXX best interests XX our XXXXXXXXXXXX," XXXX XXXXXXX X. Yurek,
XXXXX executive XXXXXXX XX AMSC. XXX 265-employee company
XXX operations in Westboro XXX Devens and in Wisconsin.
Finally, the Northeast blackout "shined a lot of XXXXX XX the
XXXXXXXX XX have XXXX talking about XX a company for XXXXX
to four years," Mr. XXXXX said. AMSC XXXXXXXX, such as a
XXXXXX installed XXXX XXXX in the XXXXX XXXXXXXXXXX grid and
high temperature XXXXXXXXXXXXXX power XXXXXX XXX other
XXXXXXX bought by XXXXX for XXX XXXX, are designed XX XXXXXXX
XXX cost, efficiency and reliability XX XXXXXXX XXXX generate,
XXXXXXX XXX use electric XXXXX. "We are a XXXXXXX XXXX
products out there XXXXXXX XXXXXXXX today," he said.
After XXXXXXX the background XXXXXXXXX and XXXXX your
research, XXXXX XXXX you XXXXXXX XXXX XXX XXXXXXXXXX
materials XXX write a XXX XX XXXXX XXXX paper XXXXXXXXX XXX
following XXXXXXXXX:
XXXX are XXX XXXXXXXXXX XXX disadvantages XXX AMSC XX forgo their
XXXX XXXXXXXXX and take XX XXXXXX financing? XX you XXXXX XXXX XXXXX
decision? XXX XXX a XXXXXXX"s XXXX of XXXXXX XX XXXXXXXXXX? Is there a
XXX XXXXXXXXX from the XXX of XXXX XXXXXXXXX? Please XXXXXXX.
Solution:-
American superconductor
AMSC chose XX select the XXXXXX XXXXXXXXX XXXX debt financing because XX XXX XXXXXXXX of XXXXXX offerings. XXXXXX Offerings, XXXXXXXX XXXXXX XXXXX in XXXX of XXXXXXXXXXX. Common Stock
XXXXXXXXXX XXX part of ownership XX XXX company.XXXX Offerings, includes XXXXX, XXXXXXXXXX, Notes XXXXXXX etc. XXXXX sources XX finance XXXXXXX fixed XXXXXXXX XXXXXX with them.
Debt offerings are XXXX XXXXXX than equity XXXXXXXXX, it is a fact maximum XXXXXX of
organizations do not prefer issuing XXXXXX XXXXX XXXXXX they XXX XXX XXXX financing. XXXXX are XXXXXX XX reasons XXXXXX XXXX XXX XX XXXX are XX follows:-
X. Debt XX XXXXXXX XXXXXX of XXXXXXX XX compared to XXXXXX the XXXXXX being XXX XXXX
associated XXXX issuing the XXXXXX XXXXX XXXX. XXXXXXXXXXXX commission, legal expenses,
XXXXXXX XXXXXXXXXXXX charges, XXXXXXX XX XXXXXXXXXX, printing XX various documents etc.
X. Lack XX XXXXXXXXX integrity, XXXX XXX XXXXXXX XXXXXX XXXXXX XXXXX than it has XX XXXX
XXX its XXXXXXXXX information XXXXXX XXXXX may XXXX XX financial XXXX XXXXXXXXX.
3. Debt XXXXXXXXX XXXXXXX XXXXXXXX XX XXX company which XXXX XXXXXXXX XXX XXXXXXX XXX
Share (EPS) which in XXXX leads to XXXXXXXX in market value of share, XXXX XXXXX
organization XX XXXXXXXX XXX XXXXXX XXXXXXXXXXXXXX.
Debt offerings XXXX offer XXXXXXX XXXXXXXXXXXXX XXXX XX:-
X. Interest payment is a fixed XXXXXXXXX which XXX XX be fulfilled in XXXXX situation.
2. XXXX debt in capital XXXXXXXXX XXXX leads to XXXX of control of the XXXXXXXXXX.
X. XXXX offerings also XXXXXXXXX XXX XXXX XXX XXXXXXXXX XXX to XXXXX XXX XXXXXX capitalization falls.
XXXX XXXXXX have XXXX a XXXXXXXX XXXXXX of debt in the XXXXXXX structure instead XX 100%
XXXXXX XXXXXXXXX.
XXXXXXXXX is the XXXXXX XX computing XXXX XX equity:-
1. Capital asset XXXXXXX XXXXX.
X. Constant XXXXXX XXXXX.
X. Using cost of equity XX XXXXXXX type of XXXXXXX in XXX XXXX industry.
XXXXXXXX XXXXXXX XX a tax XXXXXXXXXX XXXXXXX.