Peter Beck, Rocket Lab's founder and CEO, conveyed his excitement about the closure of this significant transaction, emphasizing its strategic importance to the company's growth trajectory. "Closing today's transaction is another exciting step for Rocket Lab as we continue our growth trajectory, and upsizing the offering due to oversubscription is a strong show of confidence," Beck stated.
He highlighted the offering's role in enhancing Rocket Lab's balance sheet through what is considered the most attractive cost of capital available, aiming for a less dilutive effect on existing shareholders. Beck also mentioned the company's plans to efficiently utilize this capital for various strategic initiatives, including potential mergers and acquisitions (M&A) and scaling investments.
The financial details of the transaction reveal that Rocket Lab has netted $300.3 million after deducting $43.2 million for capped call transactions and approximately $11.5 million in underwriting and offering expenses.
The notes feature an annual interest rate of 4.25%, payable semi-annually, with an initial conversion rate translating to a conversion price of approximately $5.13 per share. Importantly, the effective conversion price has been adjusted to $8.04, factoring in the capped call transactions, with the notes being non-redeemable before February 1, 2027.
Rocket Lab plans to allocate around $40 million of the net proceeds towards repaying part of its equipment financing agreement borrowings, including accrued interest. The remainder is designated for working capital, general corporate purposes, and strategic transactions, potentially encompassing acquisitions and other strategic transactions.
The offering was made exclusively to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, ensuring compliance with the requisite legal and regulatory frameworks. This strategic financial move aligns with Rocket Lab's broader objectives of bolstering its financial standing and fueling its expansion and innovation efforts within the aerospace industry.
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