Aether Systems Raises $1.4 Billion in Secondary Offering and Convertible Debt Offering

Strategic Insights -

Wireless data services company Aether Systems Inc. [NASDAQ:AETH] announced the completion of a secondary offering and concurrent convertible debt offering, raising approximately $1.4 billion. The new funds will be allocated towards investment in a European venture with Reuters, ongoing acquisition and venture activities, as well as marketing efforts. Aether Systems sold roughly 5.4 million shares of common stock at $205 per share, generating gross proceeds of about $1.1 billion. Additionally, the company issued nearly $311 million of 6 percent convertible subordinated notes due 2005.

Key Takeaways:

  • Aether Systems raised $1.4 billion in a secondary offering and concurrent convertible debt offering to invest in a European venture with Reuters and fund ongoing acquisition and marketing activities.
  • The company sold 5.4 million shares of common stock at $205 per share, generating gross proceeds of $1.1 billion, and issued $311 million of convertible subordinated notes due 2005.
  • The proceeds will be used to fund a European strategic alliance with Reuters Group PLC to provide wireless data services, repay debt, and make acquisitions.
  • Aether Systems will also use the funds for sales and marketing activities, including a national advertising campaign, and to acquire 9.9% of Metrocall Inc. and a 27.5% interest in Inciscent, a company providing wireless data services to the small office and home office market segment.
  • The company's shares closed down $9.625 or 4.37 percent to $210.88 each on the day of the announcement.

Statistics:

  • $1.4 billion: Total amount raised in secondary offering and convertible debt offering.
  • 5.4 million: Number of shares of common stock sold by Aether Systems at $205 per share.
  • $305 million: Total gross proceeds from the sale of shares.
  • $310 million: Total amount of convertible subordinated notes issued due 2005.
  • 6 percent: Interest rate on the convertible subordinated notes.
  • $100 million: Amount allocated for the European strategic alliance with Reuters Group PLC.
  • $25 million: Amount allocated for sales and marketing activities, including a national advertising campaign.
  • $19 million: Amount allocated to repay debt associated with the January acquisition of LocusOne.
  • $17 million: Amount allocated to acquire 9.9% of Metrocall Inc.
  • $10 million: Amount allocated to acquire a 27.5% interest in Inciscent.

Sources:

  • Aether Systems Inc., press release, Aether Systems Completes Secondary Offering and Concurrent Convertible Debt Offering, March 22, 2000.
  • Washtech.com, http://www.washtech.com (20000322/WIRES TELECOM, ONLINE, BUSINESS/).