Just Energy Group (NYSE: JE) is screaming for the top in the market again this morning. The gains started late last week when the company announced that the United States Federal Energy Regulatory Commission has approved its plan of arrangement, opening the door to a recapitalization transaction.
Between this coming transaction and the company’s cancellation of a reverse split, investors are excited. Here’s what’s going on:
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JE Stock Climbs With Recapitalization Transaction Expected To Close Today
Due to the approval from the United States Federal Energy Regulatory Commission, Just Energy is able to move forward with its recapitalization plan. The plan includes some pretty radical improvements to the balance sheet.
First off, JE is expected to convert about $320 million of convertible debt and preferred shares into equity. From there, the company will receive a new $75 million equity investment and enjoy the extension of due dates for about $410 million in debt and credit facilities.
That’s not a bad deal!
Through these moves, the company will improve its balance sheet, setting the stage for growth off of a strong financial foundation. At the same time, the stock will enjoy increased liquidity while the company writes smaller checks to cover interest payments.
Not to mention that the company will be revamping its Board of Directors with the addition of at least four new members, giving activists an opportunity to dive in and shift things for the better for shareholders.
Moreover, the company cancelled a planned reverse stock split on September 17. Since, there has been no sign that JE is planning on moving forward with a reverse split in the future. This suggests that management is confident in the strength of the company and the stock that represents it, giving investors even more to be excited about.
The Bottom Line
The bottom line here is simple. Just Energy’s recapitalization transaction opens the door to a strong financial foundation from which to build. Not only will the balance sheet see improvements, cost of money will decline dramatically with reduced interest payments.
Moreover, with incoming members to the Board of Directors, big improvements in operations are likely ahead. All in all, JE stock is one to watch closely.
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