DPW Holdings Inc (NYSEAMERICAN: DPW) is making a run for the top in the market this morning, trading on gains of more than 50%. The gains come after the company announced that it has eliminated debt, exciting investors about a stronger financial foundation for the future. Here’s the scoop:
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DPW Announces The Elimination Of Debt
DPW Holdings issued a press release this morning announcing that it has eliminated debt. In the release, the company said that the debt that was eliminated totaled about $2 million. The debt was held by two separate creditors.
The move was originally announced in July of this year. In order to extinguish the debt, DPW said that it issued new convertible debt in the principal amount of approimately $2.7 million.
Importantly, the company’s efforts to restructure and eliminate debt are working out very well. In fact, so far this year, the company has restructured or eliminated debts with an aggregate total of more than $14.8 million.
In the release, DPW said that it entered into an exchange agreement with an institutional investor. This investor was issued a $1.492 million convertible promissory note with an interest rate of 12% and a maturity date of January 22, 2020.
Importantly, the note is convertible into shares of DPW common stock at a conversion price equal to $8.80. So far, the investor has converted $860,000 of this note.
In a separate exchange agreement, the company issued the investor a convertible promissory note with a face value of $1.25 million. The interest rate on this note is 8% and maturity date is December 31, 2019.
The note is convertible into shares at a conversion price equal to $8.80, subject to a floor of $4. So far, the investor has converted $1.25 million of this note. However, the company remains indebted to the investor in the amount of $100,000.
In a statement, Milton “Todd” Ault, III, CEO at DPW, had the following to offer:
The elimination of this debt is a milestone for the Company as we continue to improve our capital structure to one with a long-term timeline that supports our corporate initiatives and goals. We have worked very hard to reduce the debt we incurred in conjunction with our acquisitions and expansion activities. With the progress we have made to address our debt issues, the Company can focus on being a holding company that has sales and earnings power.
Why Investors Are So Excited
While the press release was filled with what many would amount to financial jibberish, there’s a simple message here. DPW Holdings has set a goal of restructuring and eliminating debt, creating a strong financial foundation from which to build.
So far, the work that the company has done to accomplish this goal is paying off. With nearly $15 million in debt refinanced or completely eliminated, the company is taking big steps, adding shareholder value along the way.
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