AST SpaceMobile drops after announcing new share issuance and plans to raise more debt

AST SpaceMobile is down in premarket trading on Wednesday after the space-based cellular broadband network company announced that it’s refinancing by issuing more shares and raising more debt.

Most notably for shareholders is that these plans include dilution to the tune of about 2 million shares at $78.61 per share, with the proceeds being used to buy out $50 million out of $100 million in senior convertible notes due in 2032, which have a coupon of 4.25%, from their holders.

Separately, the company also announced an offering of convertible senior notes that was quickly upsized to $1 billion, which will have a coupon of 2% and are due in 2036. These notes have an initial conversion price of about $96.30 per share, more than 20% above where shares closed on Tuesday. There’s the potential for an additional $150 million of these notes to be issued.

If the full initial $1 billion of notes were converted to shares, this would notionally add around 10.4 million shares to the company’s shares outstanding (274.6 million as of the latest count, per Bloomberg).

AST SpaceMobile said it would be able to settle conversions of the notes through cash or stock, or a combination thereof, and plans to use the proceeds for general corporate purposes and “funding the deployment of AST SpaceMobile’s worldwide constellation of satellites.”

So, in sum: more shares, more overall debt, the potential for additional shareholder dilution going forward in light of this addition of convertible notes, but less debt in 2032 that had a higher coupon than these new notes.