Ault Alliance Announces Termination of At-The-Market Offering and Embarks on Path to Corporate Restructuring
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Insights
The decision by Ault Alliance, Inc. to terminate its at-the-market issuance sales agreement and refrain from using an ATM for stock sales for the foreseeable future is a significant strategic move. This indicates a shift in the company's capital raising strategy, potentially signaling to investors a more conservative approach to equity financing. The contemplation of issuing non-convertible debt suggests an alternative path to finance operations, which could be perceived as more favorable by shareholders as it avoids diluting existing equity. However, the cost of debt and the company's ability to service it must be considered, especially in the context of interest rate trends and the company's creditworthiness.
The restructuring plan to consolidate operations into two reporting segments aims to simplify the corporate structure, which could enhance transparency and make it easier for investors to assess the company's performance. The focus on bridging the valuation gap between public perception and the intrinsic value of assets could indicate that management believes the company is undervalued. However, the success of this strategy will depend on the company's execution and the market's response to the restructuring and financing changes.
The reorganization of Ault Alliance into two segments, Sentinum and Ault Capital, reflects a strategic effort to streamline operations and present a clearer narrative to the market. By separating the data center and bitcoin mining operations from the diversified holdings, the company may be aiming to attract investors with specific interests in these sectors. It is essential to monitor how the market reacts to this segmentation, as it could affect investor sentiment and the stock's liquidity. The performance of Sentinum will likely be influenced by the volatile nature of the cryptocurrency market, while Ault Capital's diverse entities will require careful management to optimize their collective performance.
In the broader context, such organizational changes are often scrutinized for their potential to unlock shareholder value. If the market perceives these moves as a coherent strategy to improve operational efficiency and financial performance, it could lead to positive revaluation. However, the challenge lies in effectively communicating the benefits of these changes and managing investor expectations during the transition period.
The termination of the at-the-market issuance sales agreement and the strategic shift away from using ATMs for stock sales may also have regulatory implications, particularly concerning disclosure requirements and securities laws. As Ault Alliance considers issuing non-convertible debt, it will need to navigate the complexities of debt financing, including compliance with the Securities Exchange Act of 1934 and possibly the Trust Indenture Act of 1939, depending on the nature of the debt instruments. The legal framework governing non-convertible debt is stringent, with an emphasis on protecting the rights of debt holders and requires transparent disclosure of the terms and risks associated with the debt.
Additionally, the planned restructuring to create a simpler organizational chart will involve legal considerations related to corporate governance, potential asset transfers and the alignment of interests among stakeholders. It will be crucial for the company to ensure that the restructuring complies with state and federal laws and that the changes are clearly communicated to shareholders to avoid any legal challenges or disputes that could negatively impact the company's reputation and financial standing.
Further, the Company plans to restructure ownership of its operating businesses to create a more simple, efficient and understandable organizational chart. Once complete, the Company will have two reporting segments, consisting of Sentinum, Inc. (“Sentinum”) and Ault Capital Group, Inc. (“Ault Capital”). Sentinum runs data center operations, including bitcoin mining, while Ault Capital contains all other entities such as Circle 8 Crane Services, LLC, Giga-tronics Incorporated, Ault Lending, LLC, and other legacy entities.
Milton “Todd” Ault III, Founder and Executive Chairman of Ault Alliance, provided comments on the Company’s strategic direction, emphasizing the importance of today’s announcement, “Today marks a pivotal moment for Ault Alliance as we conclude our ATM program and fundamentally reevaluate our financing strategy. We have accumulated a nearly
For more information on Ault Alliance and its subsidiaries, Ault Alliance recommends that stockholders, investors, and any other interested parties read Ault Alliance’s public filings and press releases available under the Investor Relations section at www.Ault.com or at www.sec.gov.
About Ault Alliance, Inc.
Ault Alliance, Inc. is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact. Through its wholly and majority-owned subsidiaries and strategic investments, Ault Alliance owns and operates a data center at which it mines Bitcoin and offers colocation and hosting services for the emerging artificial intelligence ecosystems and other industries, and provides mission-critical products that support a diverse range of industries, including a metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics, hotel operations and textiles. In addition, Ault Alliance extends credit to select entrepreneurial businesses through a licensed lending subsidiary. Ault Alliance’s headquarters are located at 11411 Southern Highlands Parkway, Suite 240,
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,” “estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties.
Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors. More information, including potential risk factors, that could affect the Company’s business and financial results are included in the Company’s filings with the
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Ault Alliance Investor Contact:
IR@Ault.com or 1-888-753-2235
Source: Ault Alliance, Inc.
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