ADA-ES (ADES) used to have a great little business. They provided services to reduce mercury emissions from coal fired power plants. Primarily they provided their expertise and experience. Equipment manufacturing and activated carbon were handled through partnerships. It was a nice high margin, low overhead business.
They have recently turned their ambitions to capturing more of the value chain.
Today they announced plans to construct a new activated carbon production plant. They expect to raise up to $260 Million debt and equity financing to construct. The market cap of the company is currently around $80 million. No matter how they raise the funds, it will represent significant dilution for existing shareholders who will also be left with a completely transformed company.
Rather than owning a cash-rich company with a high margins and profitability, they will own a cash-poor company with high capex, debt service costs, and profitability to be determined.
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