AST SpaceMobile NASDAQ:ASTS fell in after-hours trading after the satellite communications company priced a $1 billion private offering of convertible senior notes due 2034.
The notes will carry an interest rate of 1.625% and are convertible into AST SpaceMobile shares at an initial conversion price of $79.57 per share. The conversion price represents a 20% premium to the company's July 15 closing share price of $66.31.
AST SpaceMobile said the financing consists of senior unsecured debt that can be exchanged for equity under specified conditions before maturity in 2034. Convertible notes are debt securities that give holders the option to convert their investment into common stock at a predetermined price.
AST SpaceMobile shares dropped more than 12% in post-market trading following the pricing, after closing the regular session down 3.6%. Investors often monitor convertible debt offerings because they can raise capital at relatively low borrowing costs but may result in future share dilution if the notes are converted into equity.