AeroVironment (AVAV) shares plummeted 6.65% in after-hours trading following the company's announcement of substantial common stock and convertible notes offerings. The defense technology company unveiled plans to raise a combined $1.35 billion through these offerings, sparking investor concerns about potential share dilution and increased debt levels.
The proposed offerings include $750 million in common stock and $600 million in convertible senior notes due 2030. AeroVironment stated that the proceeds would be used to repay existing debt under its term loan and outstanding borrowings under its revolving credit facility. Any remaining funds would be allocated for general corporate purposes, including increasing the company's manufacturing capacity.
While this capital infusion may strengthen AeroVironment's financial position and support its growth prospects, the immediate market reaction reflects investor wariness about the offerings' impact on existing shareholders and the company's financial structure. J.P. Morgan and BofA Securities are leading the management of these offerings, with Raymond James also involved in the convertible notes offering. The completion of these offerings remains subject to market conditions, adding an element of uncertainty to the situation.
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