American Superconductor Corporation's Equity Financing Decision Analysis

Abstract

American Superconductors Corporation is a company serving its customers for the electric power energy needs. Company is renowned globally for its alternative energy & its optimizing power grid solutions & products. Company opted equity financing in 2003 for about $50 million to meet its reorganization & expansion needs. The report is written with an aim to analyze an aforementioned firm's decision and several factors to be considered whilst choosing an either source of financing.

Introduction1

American Superconductors Corporation's Financial Mix Decisions2

Equity Financing vs. Debt Financing2

Conclusion5

References6

American Superconductor Corporation's Equity Financing Decision Analysis

Introduction

American Superconductors Corporation (AMSC) is one of the market leaders that provide their target market with the variety of products & solutions related to electric power infrastructure. The history began in when the foundations of such unique corporation laid in 1987. AMSC is providing the world with a vision to enlighten it with a smarter, cleaner and better energy.

The company is a leader in providing alternative energy through its breakthrough WindTec SolutionsTM and GridTec SolutionsTM. It penetrates globally in the Asia, Australia, Europe and North America regions. AMSC's headquarter is located in Boston, Massachusetts. The company is continuously striving hard in providing its clients across the globe better renewable energy resources and enhancing performances of the power grid & control systems. WindTec Solutions encapsulates a complete range of services & products to generate & optimize wind turbines. GridTec Solutions involves planning as well as optimization of resources to bolster the efficiency and performance of the power grids.

Currently, the company estimates the total addressable global market related to its offerings is $5 billions (Annual Report, 2012, pp. 2). The company has plans to expand its global outreach in regions such as South America, Africa, Middle East and Eastern Europe.

American Superconductors Corporation's Financial Mix Decisions

In the year of 2003, company has opted for equity financing rather debt financing (Esposito, 2003, pp. 3). The management has decided that they will change the financial mix of its capital structure i.e. injecting about $50 million in its equity through public stock offering.

It is a very critical decision for any firm to decide about its capital structure. Either they have to choose equity financing or debt financing, keeping in mind the goal of the corporation i.e. maximizing the wealth of shareholders. Financial managers can decide what sort of financing do they need by analyzing the effect of ...