Following the company's pricing of a convertible debt offering that sent its stock plunging on Thursday, Virgin Galactic stock nudged 1.5 % higher in Friday's premarket.
On concerns that the convertible debt will dilute existing owners and lower earnings per share, the stock dropped about a fifth of its value to a two-year low on Thursday.
When the current market price is higher than the conversion price, debtors typically convert their debt into equity. The conversion price of the debt has been set at $12.79 per share, representing a 27 % increase over the stock's Thursday close of $10.03.
The company, which has yet to turn a profit, announced on Thursday that it will raise $425 million in a convertible note due in 2027 and take on another $75 million in debt, subject to certain circumstances. Beginning August 1, 2022, interest at a rate of 2.5 % per year will be paid semi-annually in arrears on February 1 and August 1 of each year.