TLDR
- AST SpaceMobile (ASTS) stock dropped 11% to $85.86 Thursday after pricing $1 billion in convertible senior notes due 2036 with a 2.25% interest rate
- The convertible notes can convert at $116.30 per share, representing 8.5982 shares per $1,000 in principal amount
- Company is using proceeds for general corporate purposes including debt reduction, spectrum deployment, and AI technology investment
- AST SpaceMobile is repurchasing $300 million of existing convertible notes, eliminating $51.4 million in remaining interest payments
- The satellite operator successfully unfolded its larger BlueBird 6 satellite Wednesday, which has 10 times the bandwidth of earlier models
AST SpaceMobile stock took a hit Thursday morning after the company priced a massive debt offering. Shares fell 11% to $85.86 in early trading.
The space-based cellular broadband provider announced it priced $1 billion in convertible senior notes due 2036. The notes carry a 2.25% interest rate.
The convertible structure allows holders to exchange the debt for 8.5982 shares per $1,000 in principal. That works out to an initial conversion price of about $116.30 per share.
It’s a steep price to pay for capital. But building a satellite constellation doesn’t come cheap.
AST SpaceMobile stock has tripled over the past 12 months. The company is capitalizing on that momentum to fund its ambitious expansion plans.
The proceeds will go toward general corporate purposes. That includes reducing higher-interest debt on the balance sheet.
The company also plans to accelerate deployment of its controlled spectrum bands globally. Investment in government space opportunities in the U.S. is another priority.
Debt Restructuring and Satellite Progress
AST SpaceMobile isn’t just adding debt. The company announced Thursday it’s repurchasing roughly $300 million of existing convertible senior notes.
The move eliminates $51.4 million in remaining interest payments. AST SpaceMobile is issuing about 6.3 million shares to participating note holders to fund the buyback.
The transaction will remove approximately 5.2 million underlying shares from the conversion structure.
The timing coincides with operational progress. AST SpaceMobile successfully unfolded its BlueBird 6 satellite on Wednesday.
The new satellite dwarfs earlier models. It’s more than three times the size of the BlueBird 1-5 series.
Enhanced Capacity and Network Expansion
BlueBird 6 packs up to 10 times the bandwidth capacity of previous satellites. That’s a major upgrade for the network’s capability.
AST SpaceMobile previously stated it has a fully funded plan to deploy 45 to 60 satellites by the end of 2026. That’s the minimum needed to provide service in key markets.
The company is also eyeing opportunities in artificial intelligence. The notes offering specifically mentions monetizing proprietary technology for AI applications.
Despite Thursday’s drop, the stock remains well above year-ago levels. Investors have been betting on AST SpaceMobile’s first-mover advantage in space-based cellular.
The satellite operator is racing to build out its constellation before competitors gain traction. The fresh capital provides runway for that expansion.
The dilution from the convertible notes is weighing on the stock in the near term. But AST SpaceMobile is trading the short-term pain for long-term growth capital.
The company’s balance sheet will look healthier after eliminating the higher-interest debt. And the BlueBird 6 deployment shows technical execution remains on track.
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