AST SpaceMobile Announces $400 Million Convertible Senior Notes Offering Due 2032
AST SpaceMobile, a leader in developing the world’s first space-based cellular broadband network accessible directly by everyday smartphones, announced its plans to offer $400 million aggregate principal amount of convertible senior notes due 2032 (the “notes”). This offering, which is being conducted privately, will target qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”). The offering is subject to market conditions and other factors that may affect its final execution. Additionally, AST SpaceMobile plans to grant initial purchasers an option to buy up to an additional $60 million of notes within 13 days of the initial issuance.
Details of the Notes Offering
The convertible senior notes will be senior, unsecured obligations of AST SpaceMobile. They will accrue interest payable semiannually in arrears, with a maturity date set for March 1, 2032, unless the notes are earlier converted, redeemed, or repurchased. Upon conversion, the notes may be redeemed for cash, shares of AST SpaceMobile’s Class A common stock, or a combination of both, at the company’s discretion. The terms of the offering, including the interest rate and conversion rate, will be determined at the time of pricing.
Use of Proceeds from the Offering
AST SpaceMobile intends to utilize a portion of the proceeds from the offering to fund capped call transactions. These transactions are designed to manage dilution and offset any cash payments above the principal amount of converted notes. The remaining proceeds will be used for working capital and general corporate purposes, which may include other strategic transactions. If the initial purchasers choose to exercise their option for additional notes, a portion of the proceeds from those additional notes will also be directed toward entering into further capped call transactions with the option counterparties.
Capped Call Transactions
As part of the offering, AST SpaceMobile plans to enter into capped call transactions with one or more of the initial purchasers of the notes or their affiliates, as well as with other financial institutions. These transactions will cover the number of shares of AST SpaceMobile’s Class A common stock initially underlying the notes, with adjustments as needed. These capped call transactions aim to reduce potential dilution to the Class A common stock when the notes are converted, and to offset any cash payments that may exceed the principal amount of the converted notes, subject to a cap.
When establishing their initial hedge positions, the option counterparties or their affiliates are expected to engage in various derivative transactions related to AST SpaceMobile’s Class A common stock. This activity may include buying shares of AST SpaceMobile’s stock, either from the market or from certain investors in the notes. Such transactions could influence the market price of the Class A common stock and/or the notes.
Potential Impact on the Market
Following the pricing of the notes, the option counterparties or their affiliates may adjust their hedge positions by entering into or unwinding various derivative transactions or by buying or selling AST SpaceMobile’s Class A common stock in secondary market transactions. This could affect the market price of both the common stock and the notes. Such activities may impact the conversion process, potentially altering the number of shares or the value of the consideration that a noteholder would receive upon conversion. If these activities occur during the observation period related to the conversion, they could influence a noteholder’s ability to convert the notes and the value of the received shares.
Regulatory and Legal Considerations
This offering is being conducted in compliance with Rule 144A under the Securities Act, which permits the sale of the notes to qualified institutional buyers. As such, neither the notes nor the Class A common stock that may be issued upon conversion of the notes will be registered under the Securities Act or under the laws of any other jurisdiction. Unless they are registered, the notes and common stock may not be offered or sold in the United States, except under an applicable exemption or in a transaction that is not subject to registration requirements.
Disclaimer
This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, any of the notes or shares of AST SpaceMobile’s Class A common stock. The offering is being made solely through a private offering memorandum, and the notes will only be sold to qualified institutional buyers. This release does not constitute an offer, solicitation, or sale in any jurisdiction where such activities would be unlawful.
AST SpaceMobile’s intent with this offering is to advance its mission of connecting the world through its space-based network, catering to both commercial and government applications, and continuing to innovate in the realm of global mobile communications.
