[8-K] Telephone and Data Systems Inc. Reports Material Event

Rhea-AI Filing Summary

AeroVironment, Inc. (Nasdaq: AVAV) has filed a preliminary prospectus supplement (Form 424B5) for a public offering of $750 million of common stock, with a 30-day underwriters’ option for up to an additional $112.5 million. The company is simultaneously marketing a separate $600 million (up to $690 million) offering of Convertible Senior Notes due 2030. Neither transaction is contingent on the other.

Key transaction terms

• Common stock trades on Nasdaq under the symbol “AVAV”; last reported price on 27-Jun-2025 was $278.07.
• Pro-forma share count will rise to 48,511,437 immediately after the equity offering (from 45,814,275).
• Underwriters: J.P. Morgan Securities LLC and BofA Securities, Inc.; their banking affiliates are lenders under the company’s credit facilities and will receive a portion of the proceeds.

Use of proceeds

• $700.2 million to repay outstanding borrowings under the New Term Loan (matures 1-May-2027).
• $265.1 million to repay borrowings on the Revolving Credit Facility (matures 4-Oct-2029).
• Any remainder for general corporate purposes, including increased manufacturing capacity.

Strategic backdrop – BlueHalo merger

• AeroVironment closed the all-stock acquisition of BlueHalo on 1-May-2025, issuing 17,425,849 shares and drawing $925 million of debt to retire BlueHalo obligations and pay transaction costs.
• Lock-up agreements restrict resale of the BlueHalo shares until May-2026 (40%), Nov-2026 (30%) and May-2027 (30%).

Recent financial performance

• Quarter ended 30-Apr-2025 GAAP EPS: $0.59; Non-GAAP EPS: $1.61.
• FY-2025 GAAP EPS: $1.55; Non-GAAP EPS: $3.28.
• FY-2025 Adjusted EBITDA: $146.4 million, up from $127.8 million in FY-2024.
• Q4-2025 goodwill impairment charge: $18.4 million.

Capitalisation impact

• As-adjusted cash rises to $454.1 million; total debt falls from $955.0 million to $600.0 million if both offerings close and proceeds are applied as planned.
• Total shareholders’ equity would rise from $886.5 million to $4.23 billion (reflecting BlueHalo equity issuance and the new share sale).

Risk highlights

• Approximately 5–6 % dilution to existing shareholders from the equity issuance, with further dilution possible from note conversion.
• Successful integration of BlueHalo is critical; merger-related synergies and cost savings are not assured.
• If the note offering is unsuccessful, AeroVironment may retain higher leverage until alternative funds are secured.

Overall, the combined equity and convertible offerings are designed to deleverage the balance sheet after the transformational BlueHalo merger, provide funding for capacity expansion, and position the company for growth across autonomous systems, precision-strike and other defense technology markets.

Positive

• Debt reduction: Planned use of proceeds repays $965.3 million of secured borrowings, materially lowering leverage.
• Improved liquidity: Pro-forma cash increases to $454.1 million, enhancing financial flexibility.
• Adjusted EBITDA growth: FY-2025 Adjusted EBITDA rose to $146.4 million from $127.8 million, indicating operating momentum.
• BlueHalo lock-up: Staggered release of merger shares limits immediate secondary supply pressure.

Negative

• Share dilution: Equity issuance raises outstanding shares by roughly 6 %, directly diluting EPS.
• Goodwill impairment: Q4-2025 charge of $18.4 million signals post-merger valuation risk.
• Convertible note overhang: Future conversions may add further dilution; hedging could weigh on share price.
• Integration risk: Achieving BlueHalo cost and revenue synergies remains uncertain and is highlighted in Risk Factors.

Insights

Financial Analyst

TL;DR: Equity raise deleverages post-merger balance sheet but adds 6 % dilution; credit repayment improves net leverage.

Deleveraging & liquidity. Applying $965.3 million of gross proceeds to the Term Loan and Revolver slashes secured debt from $955 million to $0, leaving only the prospective $600 million senior convertible notes. Pro-forma cash of $454 million creates ample runway for working-capital and capacity expansion.
Dilution vs. value. Issuance lifts share count by c.2.7 million shares (≈6 %) but eliminates ≥$27–$40 million in annual interest expense (assuming 4–6 % blended coupons), which is accretive to future EPS if operating momentum continues.
BlueHalo integration risk. Goodwill impairment in Q4-2025 signals valuation pressure; management must deliver promised revenue synergies and margin expansion. Lock-up schedule reduces immediate overhang, yet 40 % of BlueHalo shares hit the market in May-2026.
Convertible note overhang. While flexible, the notes introduce potential dilution above the 30 % conversion premium; hedging activity may pressure the stock near-term.
Net effect. I view the transaction as near-term neutral (dilution offsets lower leverage) but strategically positive if BlueHalo synergies materialise and defense outlays stay strong.

Risk Analyst

TL;DR: Offering shifts risk from liquidity to equity holders; integration, defense budgets and lock-up expiries remain watch-points.

The refinancing extends maturities and lowers secured leverage, reducing covenant pressure under the Credit Agreement. However, shareholders assume dilution and potential volatility from convertible arbitrage. The goodwill write-down highlights integration execution risk. Exposure to U.S. and allied defense budgets, a key revenue driver, is unchanged. Lock-up roll-offs beginning May-2026 could trigger selling waves. I classify the filing as impactful but balanced; successful capital raise is essential to maintaining investment-grade-like credit metrics post-merger.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 25, 2025

TELEPHONE AND DATA SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-14157

36-2669023

(State or other jurisdiction of incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602

(Address of principal executive offices and zip code)

Registrant's telephone number, including area code: (312) 630-1900

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Shares, $.01 par value

TDS

New York Stock Exchange

Depositary Shares each representing a 1/1000th interest in a share of 6.625% Series UU Cumulative Redeemable Perpetual Preferred Stock, $.01 par value

TDSPrU

New York Stock Exchange

Depositary Shares each representing a 1/1000th interest in a share of 6.000% Series VV Cumulative Redeemable Perpetual Preferred Stock, $.01 par value

TDSPrV

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐ Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 1.01.  Entry into a Material Definitive Agreement

On June 25, 2025, United States Cellular Corporation (UScellular), subsidiary of Telephone and Data Systems, Inc., entered into a Fourth Amended and Restated Credit Agreement (Credit Agreement), as disclosed in UScellular’s Form 8-K dated June 25, 2025, which Form 8-K is incorporated by reference herein. The terms and conditions of the UScellular Credit Agreement are described in such Form 8-K. A copy of the UScellular Credit Agreement is incorporated by reference herein as Exhibit 4.1.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The disclosure set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.

Item 9.01. Financial Statements and Exhibits

(d)   Exhibits

Exhibit Number						Description of Exhibits
4.1						Fourth Amended and Restated Credit Agreement, dated as of June 25, 2025, between United States Cellular Corporation, CoBank, ACB as Administrative Agent, and the other lenders party thereto, is hereby incorporated by reference from Exhibit 4.1 to UScellular's Current Report on Form 8-K dated June 25, 2025.
104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

						TELEPHONE AND DATA SYSTEMS, INC.
Date:			June 30, 2025			By:			/s/ Vicki L. Villacrez
									Vicki L. Villacrez
									Executive Vice President and Chief Financial Officer

FAQ

Why is AeroVironment (AVAV) raising $750 million of common stock?

Proceeds will primarily be used to repay $700.2 million of Term Loan debt and $265.1 million of Revolver borrowings, with any remainder for general corporate purposes such as expanding manufacturing capacity.

How much shareholder dilution will result from the equity offering?

The share count will rise from 45,814,275 to 48,511,437, an increase of about 5-6 %, before considering possible note conversions.

What are the terms of the concurrent convertible note offering?

AeroVironment is marketing $600 million of Convertible Senior Notes due 2030, bearing a fixed coupon (rate to be set), with conversion allowed under specified price and event triggers at a 30 % premium.

How did AeroVironment perform financially in FY-2025?

GAAP diluted EPS was $1.55; non-GAAP diluted EPS was $3.28. Adjusted EBITDA increased to $146.4 million from $127.8 million in FY-2024.

What is the status of the BlueHalo merger shares?

The 17,425,849 shares issued to BlueHalo sellers are subject to a lock-up: 40 % release on 1-May-2026, 30 % on 1-Nov-2026, and the final 30 % on 1-May-2027.

Will the equity and convertible offerings both close?

The filings state that neither offering is conditioned on the other; it is possible one closes without the other.