Key points
- Rocket Lab sold 29.3 million new shares
- The $3.6 billion bridge commitment is canceled
- RKLB now trades below the deal's price floor
- Iridium holders vote on September 24
Rocket Lab (RKLB) says it now has enough committed funding to cover the cash portion of its $8 billion acquisition of Iridium Communications (IRDM). It sold 29.3 million new shares for about $1.944 billion and canceled the $3.6 billion bank loan arranged as a backstop. Rocket Lab said the ATM proceeds, its existing cash and an Iridium term loan together are "an amount sufficient to pay the required cash consideration."
That removes the bridge financing, but it does not settle what Iridium holders will receive in stock. They vote on September 24, and Rocket Lab's shares have fallen below the $67.50 collar floor that preserves the deal's headline value of $54 per Iridium share. Rocket Lab released the financing update before Tuesday's open and filed it with the SEC the same morning.
The stock was sold through Rocket Lab's at-the-market program, which lets a company sell shares gradually into the market rather than price one large block. Rocket Lab set up a program of up to $3 billion on May 20, before it agreed to buy Iridium. By August 13, it had sold about $1.056 billion of shares. It then replaced the agreement with a new one for the $1.944 billion that remained. The 29.3 million shares reported Tuesday complete that remaining capacity, at an average price of about $66 each.
Rocket Lab had 598.4 million shares outstanding on August 5, according to its second-quarter report. The new 29.3 million shares add about 5% to that count. It also held $2.13 billion in cash and cash equivalents at the end of June.
The loan Rocket Lab canceled was a 364-day, $3.6 billion senior secured bridge facility committed by Deutsche Bank and Wells Fargo on June 28, the day the merger agreement was signed. Rocket Lab called its termination "de-risking the capital structure ahead of the targeted close."
Iridium also amended its $1.775 billion term loan to let the acquisition proceed. The lenders agreed to exempt the takeover from the agreement's change-of-control clause. Once the deal closes, Rocket Lab USA will guarantee the loan on an unsecured basis.
What Iridium shareholders actually get
Each Iridium share converts into $27.00 in cash plus a number of Rocket Lab shares set by a formula, and the formula is capped at both ends. If Rocket Lab's measured price is $67.50 or lower, the ratio is fixed at 0.4000 shares. Between $67.50 and $112.50 the ratio floats to deliver $27.00 of stock, and at $112.50 or above it is fixed at 0.2400.
The measured price is not Tuesday's quote. Rocket Lab's merger prospectus defines it as the volume-weighted average price over the ten consecutive trading days ending on the second full trading day before the deal closes, which both companies expect in mid-2027. The prospectus carries its own table of what each price would pay.
| Rocket Lab price | Exchange ratio | Stock | Cash | Total |
|---|---|---|---|---|
| $60.00 | 0.4000 | $24.00 | $27.00 | $51.00 |
| $67.50 (collar floor) | 0.4000 | $27.00 | $27.00 | $54.00 |
| $80.00 | 0.3375 | $27.00 | $27.00 | $54.00 |
| $100.00 | 0.2700 | $27.00 | $27.00 | $54.00 |
| $112.50 (collar ceiling) | 0.2400 | $27.00 | $27.00 | $54.00 |
| $125.00 | 0.2400 | $30.00 | $27.00 | $57.00 |
Rocket Lab's stock has been moving away from the $67.50 floor all summer. The shares hit a 52-week high near $151 on May 27, closed at $98.01 on June 29, the day the deal was announced, and finished Monday at $62.55. Put Monday's close through the formula and each Iridium share collects $27.00 in cash plus 0.4000 of a Rocket Lab share, which comes to $52.02.
Iridium finished Monday at $46.18, about 11% below that $52.02, and went ex-dividend Tuesday on a quarterly payment of 15 cents. The discount has been there a while. Six Iridium insiders sold $19.3 million of stock in mid-August at an average of $50.23, under the deal's notional value at the time.
Iridium's special meeting runs virtually on September 24 at 8:30 a.m. Eastern. Shareholders received the definitive proxy on or about August 26, and every Iridium director who owns stock has signed an agreement to vote the deal through. Regulatory approvals have not come yet. Rocket Lab is still working to a mid-2027 close.
