Shares of AeroVironment Inc. (AVAV) tumbled 7% in after-hours trading on Monday, following the company's announcement of substantial common stock and convertible notes offerings. The sharp decline reflects investor concerns about potential share dilution and increased debt levels.
AeroVironment revealed plans to raise $750 million through a common stock offering and $600 million via convertible senior notes due in 2030. The company stated that the proceeds would be used to repay existing debt and support general corporate purposes, including expanding manufacturing capacity. This move signals a significant capital raise for the unmanned aircraft systems manufacturer.
The offerings, managed by J.P. Morgan and BofA Securities, with Raymond James also involved in the convertible notes issuance, are subject to market conditions. AeroVironment has granted underwriters a 30-day option to purchase additional shares and notes to cover over-allotments. While this capital infusion may strengthen the company's financial position and growth prospects, the immediate market reaction suggests investors are wary of the potential dilutive effect on existing shareholdings and the impact of increased debt on the company's balance sheet.
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