Rocket Lab Raises $355 Million in Private Offering

Rocket Lab Rocket

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Insider Brief:

  • Rocket Lab has closed a private offering of convertible senior notes, securing $355 million in principal.
  • Initially pegged at $300 million, the offering saw an increase fueled by robust demand, including the full exercise of a $55 million option available to initial purchasers.
  • Factoring in capped call transactions, the effective conversion price for the notes is $8.04 per share.
  • Image credit: Rocket Lab

Rocket Lab, a leader in launch services and space systems, has closed a significant private offering of convertible senior notes, securing $355 million in principal. The notes, set to mature in 2029, bear an interest rate of 4.25% per annum, with the inaugural payment slated for August 1, 2024, as announced in a press release.

Initially pegged at $300 million, the offering saw an increase fueled by robust demand, including the full exercise of a $55 million option available to initial purchasers. CEO Peter Beck hailed the transaction’s closure as a pivotal moment for Rocket Lab, citing investor confidence as the driving force behind the company’s growth trajectory.

Proceeds from the offering, approximately $300.3 million after accounting for capped call costs and associated expenses, will serve various purposes. Among these are repaying approximately $40 million of borrowings under Rocket Lab’s equipment financing agreement, with the remainder allocated to working capital, potential acquisitions, and strategic initiatives.

Qualified institutional buyers were the exclusive recipients of the notes under Rule 144A of the Securities Act of 1933. The notes hold an initial conversion rate of around 195 shares of common stock per $1,000 principal amount, translating to a conversion price of roughly $5.13 per share. Factoring in capped call transactions, the effective conversion price stands at $8.04.

Rocket Lab, renowned for its Electron launch vehicle and track record of delivering over 176 satellites into orbit, is also advancing with the Neutron rocket for larger payload deliveries and interplanetary missions. Additionally, the company supplies a diverse range of spacecraft components and technologies.

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