Rocket Lab nasdaq Rklb Shares Falter Following 5 Million Convertible Note Proposal

Rocket Lab (NASDAQ: RKLB) Shares Falter Following $275 Million Convertible Note Proposal

Rocket Lab USA (NASDAQ: RKLB) stock tumbled more than 17% on Thursday in response to a $275 million convertible note proposal.

Rocket Lab (RKLB) has initiated a private offering for institutional investors to raise $275 million through convertible senior notes maturing in 2029.

The company plans to allocate around $40 million from the net proceeds to settle debts related to an equipment financing agreement. The remaining funds will be used for working capital, general corporate purposes, and possibly acquisitions.

The satellite launch company stated that the senior notes, which are due to mature on February 1, 2029, will accumulate interest payable semi-annually. In addition, Rocket Lab intends to grant the initial purchasers of these notes the option to buy additional notes up to a principal amount of $41.25 million. This option, starting from the date of issuance of the original notes, can be exercised within a 13-day period.

Preliminary Q4 2023 Financial Results

Moreover, Rocket Lab has disclosed its preliminary financial outcomes for the fourth quarter.

The unaudited report for the quarter ending December 31 indicates that Rocket Lab’s Q4 revenue is expected to be between $59.0 million and $61.0 million, a rise from the $51.8 million reported in the corresponding quarter of the previous year. Notably, the company’s Space Systems segment saw an increase in revenue, with projections between $50.5 million and $52.5 million, a jump from $39.7 million in Q4 of the prior year.

Contrarily, the revenue from its Launch Services is projected to be around $8.5 million, a drop from the $12.0 million reported in the same quarter of the preceding year.

The non-GAAP gross margin is anticipated to be between 31.4% and 33.2%. Furthermore, the company anticipates a net loss of $49 million to $52.5 million and an adjusted EBITDA loss ranging from $28 million to $30 million.

Rocket Lab (NASDAQ: RKLB) Stock Reaction

RKLB stock cratered -17.11% on Thursday. The traders had exchanged hands with 60,932,531 (60.93 million) shares compared to the average daily trading volume of 6.12 million.