ConnectM Eliminates $13.7 Million Debt

Rhea-AI Summary

ConnectM Technology Solutions (Nasdaq: CNTM) has announced the completion of its second tranche of a debt-to-equity swap, converting an additional $6.2 million of outstanding debt to common equity at $2.00 per share. This brings the total debt conversion to $13.7 million, achieving 90% of the company's $15 million target within 30 days of the Board approved plan.

The debt-to-equity swap is part of ConnectM's strategy to deleverage its balance sheet. As a result, the company has reduced its annual interest expense by more than $2 million, increasing Free Cash Flow for operational investments to drive revenue and profitability growth. The move also improves ConnectM's credit profile and follows an initial tranche of $7.5 million debt-to-equity conversion previously announced.

Positive

• Converted $13.7 million of debt to equity, achieving 90% of $15 million target
• Reduced annual interest expense by over $2 million
• Increased Free Cash Flow for operational investments
• Improved credit profile

Negative

• Potential dilution of existing shareholders due to debt-to-equity conversion

Insights

Financial Analyst

ConnectM's debt-to-equity conversion is a significant positive development for the company's financial health. By eliminating $13.7 million in debt, they've substantially deleveraged their balance sheet. This move reduces annual interest expenses by over $2 million, freeing up cash flow for operational growth and potentially improving profitability. The conversion at $2.00 per share also demonstrates confidence in the company's equity value. With 90% of their $15 million target achieved within just 30 days, ConnectM is executing their financial optimization strategy efficiently. This improved credit profile could lead to better financing terms in the future and enhance investor confidence. However, the dilution effect on existing shareholders should be considered, as the conversion increases the number of outstanding shares.

Market Research Analyst

ConnectM's strategic move to swap debt for equity signals a strong commitment to financial restructuring post-public listing. This action aligns with broader market trends where companies are prioritizing balance sheet optimization to navigate economic uncertainties. The rapid execution of 90% of their target within a month demonstrates management's agility and could positively influence market perception. The focus on the "electrification economy" positions ConnectM in a growing sector and this financial maneuver may enhance their ability to capitalize on market opportunities. Investors should watch for potential improvements in ConnectM's market position and competitiveness as a result of this strengthened financial footing. The reduction in debt burden could also make the company more attractive for potential partnerships or investments in the rapidly evolving tech and energy sectors.

~ Completed Conversions of $6.2 Million Debt-to-Equity in Second Tranche ~

MARLBOROUGH, Mass., Sept. 26, 2024 (GLOBE NEWSWIRE) -- ConnectM Technology Solutions, Inc. (Nasdaq: CNTM) (“ConnectM” or the “Company”), a technology company focused on the electrification economy, today announced the Company has completed its second tranche of a debt-to-equity swap by converting an additional $6.2 million of the Company’s outstanding debt to common equity at $2.00 per share, bringing the current total to $13.7 million. This debt-to-equity swap is part of a series of actions to deleverage the balance sheet.

With the total conversions the Company has:

• achieved 90% of $15 million target within 30 days of the Board approved plan;
• prioritized balance sheet optimization in immediate action following public listing;
• deleveraged its balance sheet, removing $13.7 million in debt;
• reduced annual interest expense by more than $2 million, thereby increasing Free Cash Flow to invest in operations to grow revenue and profitability; and
• improved its credit profile.
  

Today’s announcement follows the previously announced approval from the Company’s Board of Directors and follows the previously announced initial tranche of $7.5 million debt-to-equity conversion.

About ConnectM Technology Solutions, Inc.

ConnectM is at the forefront of advancing the electrification economy, integrating electrified energy assets with its AI-driven technology solutions platform. Serving residential and light commercial buildings, as well as all-electric original equipment manufacturers (OEMs), ConnectM’s proprietary platform accelerates the transition to solar and all-electric heating, cooling, and transportation. By leveraging technology, data, artificial intelligence, contemporary design, and behavioral economics, ConnectM aims to make electrification more user-friendly, affordable, precise, and socially impactful. The company’s vertically integrated approach includes wholly-owned service networks and a comprehensive technology stack, enabling customers to reduce their reliance on fossil fuels, lower energy costs, and minimize their carbon footprint. ConnectM is headquartered in Marlborough, Massachusetts.

For more information, please visit: https://www.connectm.com/

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this press release, regarding our future financial performance and our strategy, expansion plans, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “project” or the negative of such terms or other similar expressions. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release. We caution you that the forward-looking statements contained herein are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control.

In addition, we caution you that the forward-looking statements regarding the Company contained in this press release are subject to the risks and uncertainties described in the “Cautionary Note Regarding Forward-Looking Statements” section of the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2024. Such filing identifies and addresses other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and ConnectM is under no obligation to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Contact:

MZ North America

(203) 741-8811

ConnectM@mzgroup.us

FAQ

What is the total amount of debt ConnectM (CNTM) has converted to equity?

ConnectM has converted a total of $13.7 million of debt to equity, achieving 90% of its $15 million target within 30 days of the Board approved plan.

At what price per share did ConnectM (CNTM) convert its debt to equity?

ConnectM converted its debt to common equity at $2.00 per share.

How much has ConnectM (CNTM) reduced its annual interest expense?

ConnectM has reduced its annual interest expense by more than $2 million through the debt-to-equity conversion.

What was the amount of the second tranche of debt-to-equity conversion for ConnectM (CNTM)?

The second tranche of debt-to-equity conversion for ConnectM was $6.2 million.