Why AST SpaceMobile Shares Are Falling Thursday

AST SpaceMobile Inc ASTS shares are tumbling Thursday after the company announced the pricing of a proposed offering of convertible senior notes.

What Happened: AST SpaceMobile announced a proposed private offering after the market close on Wednesday. The space-based cellular broadband network company priced the offering early Thursday morning.

AST SpaceMobile announced plans to offer $400 million worth of convertible senior notes due 2032 in a private offering to institutional buyers.

The 4.25% convertible senior notes have an initial conversion price of approximately $26.99 per share. Capped call transactions in connection with the pricing of the notes have an initial cap price of $44.98 per share. The company also granted the initial purchasers a 13-day period to purchase up to an additional $60 million of the notes.

The sale of the notes to the initial purchasers is expected to settle on Jan. 27. AST SpaceMobile anticipates proceeds of approximately $387.9 million. The company intends to use approximately $38.7 million of the net proceeds to pay the cost of the capped call transactions. The remaining proceeds are expected to be used for working capital or other general corporate purposes, which may include other strategic transactions.

AST SpaceMobile last reported earnings in November. The company said at the time that it ended the quarter with $518.9 million in cash, cash equivalents and restricted cash.

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ASTS Price Action: AST SpaceMobile shares were down 14.4% at $19.25 at the time of publication Thursday, according to Benzinga Pro.

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