Voyager Technologies, Inc. (NYSE:VOYG) shares dropped sharply in after-hours trading Tuesday. The space and defense company plans to raise $350 million by selling convertible debt.

• VOYG stock is down. See the chart and price action here.

The Deal

Voyager intends to sell $350 million of convertible senior notes due 2032 in a private offering to qualified institutional buyers. The initial purchasers are expected to get an option to buy up to $52.5 million more. If they use it, the deal grows to $402.5 million.

Part of the proceeds will fund organic growth and strategic acquisitions. Voyager will also buy a capped call to limit dilution. The cap is expected to sit at least 150% above the stock’s last reported sale price at pricing. Based on Tuesday’s close, the cap would be at least about $93.80 per share.

Voyager ended the second quarter with $373.4 million in cash and cash equivalents and total liquidity of $585.5 million.

Why The Stock Is Falling

Convertible deals often hit a stock right away. Arbitrage funds that buy the notes usually short the shares as a hedge. At full size, the offering equals about 18% of Voyager’s market value of roughly $2.27 billion.

VOYG Stock Price Activity: Voyager stock was down 7.67% at $34.65 during after-hours trading Tuesday, according to data from Benzinga Pro.

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