Also $Soluna Holdings, Inc.(SLNH)$ $Soluna Holdings, Inc.(SLNHP)$
To follow on from my article on Soluna Holdings, the following points are relevant:
1. The company is controlled by a private equity firm, which makes a change of control almost inevitable in the end - this underpins the special situation nature of Soluna preferreds, who are entitled to receive $25 + accrueed interest (>$5 currently).
2. Further more, whilst the preferred dividend is not being paid currently, it is still accuring at $1.75/year, so one is earning >15% whilst we wait.
3. Insiders received 2m preferred shares in summer 2024 as part of incentive plans - this was after the dividend had been halted. Why would you issue a effective defaulted quasi debt instrument to insiders? It's not typical, its becausthey know they get paid in a change of control.
This is why the common shares is dangerous to own, as the contingent liability associated with preferred shares in a change of control diulutes the true ownership stake of common shareholders.
4. In the meantime, Soluna has a US$100m debt agreement, of which only ~1/3rd has been drawn down. They likely needed equity to unlock the rest and this was completed with a recent ~$US30m common share sale.
As such a pending catalyst is the finalizing of the related ~US$65m drawn down, at which point they have ~$100m fresh fire power to either buyout minority interest investors in their current assets and/or fund part of their pipeline
This initiates a virtuous cycle where new assets produce new income to now allow the company to grow organically, as it reaches sufficientscale.
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