AST SpaceMobile $ASTS ( ▲ 0.35% ) is under pressure after unveiling a complex financing package designed to fund satellite expansion and refinance debt. The company announced plans to issue $1 billion in convertible senior notes due in 2036, with an option for buyers to purchase up to $150 million more.
Investors reacted negatively, sending shares lower in premarket trading.
Raising Cash for Expansion and Debt Cleanup
AST $ASTS said the proceeds from the convertible note offering will go toward general corporate purposes, including accelerating its global satellite deployment and pursuing US government space contracts. Part of the funds will also be used to reduce higher interest debt.
In a separate move, the company plans to repurchase up to $300 million of its existing convertible notes due in 2032. That includes $50 million of 4.25% notes and $250 million of 2.375% notes.
Stock Issuance Adds Dilution Risk
The debt repurchase will be funded through concurrent issuances of class A common stock. That component likely raised concerns about potential dilution for existing shareholders.
While the refinancing could improve the company’s long term capital structure, the near term impact of additional debt and stock issuance appears to be weighing on sentiment.
Operational Progress Overshadowed
Earlier in the day, AST $ASTS shares had briefly risen after the company announced the successful unfolding of its BlueBird 6 satellite. However, the financing news overshadowed that milestone.
For a capital intensive satellite network buildout, fresh funding is expected. Still, investors are clearly wary of the cost and structure of the latest capital raise.