Shares of VSE Corp (NASDAQ:VSEC) slipped about 1.2% in light premarket trading on Monday to around $215.99 after the company unveiled plans to raise $1 billion in new capital to support a major acquisition.
The Florida-based aviation services group said it is launching public offerings totaling $1 billion, made up of $650 million in common stock and $350 million in three-year mandatory convertible tangible equity units. Jefferies and RBC Capital Markets are acting as joint bookrunners on the transaction.
VSE said the proceeds will be used primarily to help fund its previously announced $2 billion purchase of Precision Aviation Group from GenNx360 Capital Partners.
Should the Precision Aviation Group transaction fail to close, the company said it would redirect the funds toward general corporate purposes. These could include redeeming or repurchasing the purchase contract and amortizing note components linked to a potential merger termination.
VSE currently has roughly 23.4 million shares outstanding, implying a market capitalization of about $5 billion.