EquitiesSatcom

AST SpaceMobile Announces $400M Convertible Notes Raise

Image: AST SpaceMobile

AST SpaceMobile is raising $400M through convertible notes to continue building out its BlueBird constellation, the company announced on Wednesday.

For the uninitiated: A convertible note is debt that can be converted into equity if a certain stock price is reached (in this case, $26.99—20% higher than when the raise was announced). AST is able to raise money without issuing shares immediately; investors get a healthy dose of downside protection (debt) and upside exposure (potential to convert to equity).  

Win-win? Not necessarily for existing shareholders. $ASTS shares dropped 12% yesterday on dilution concerns. 

Convertible note nitty gritty: 

  • Interest rate: 4.25% 
  • Maturity: 2032 
  • Capped call: $44.98 
  • Net proceeds: $387.9M

535% surge: AST shares have exploded 535% over the last 12 months, driven by two main factors:

  • Two key commercial and financing partnerships with Verizon and AT&T 
  • The launch of its first commercial satellites in September

Yesterday, the FCC granted AST a Special Temporary Authorization to begin testing its direct-to-cell service with AT&T. The go-ahead means the company’s five BlueBird satellites—which launched in September—can begin operations.

Constellation economics: The company had $567.5M of cash + equivalents on Dec 31, according to an SEC filing submitted Wednesday. With the additional $388M from the convertible bond, AST will have nearly $1B in the coffers to build out its expensive BlueBird constellation.

  • In November, the company signed contracts to launch 45 BlueBird satellites, with the option to increase that number to 60 through 2026. 
  • The average cost of direct materials and launch per satellite is $19M to $21M, management revealed on its Q3 earnings call. 60 satellites x $20M = $1.2B. 
  • This week’s funding announcement will go a long way toward helping AST fund the billion-dollar endeavor. 

+ Ligado’s spectrum:  AST SpaceMobile and Ligado Networks announced a deal earlier this month to transfer 40 MHz of L-band Mobile Satellite Service (MSS) spectrum to AST. The company believes the spectrum acquisition will help increase coverage and enable connectivity speeds of up to 120 Mbps

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