AST SpaceMobile raises $400 million in convertible notes for Payload Space initiative.
AST SpaceMobile recently announced a significant fundraising endeavor through issuing $400 million in convertible notes to support the expansion of its BlueBird constellation, a move unveiled by the company on Wednesday. Convertible notes are a form of debt that can be converted into equity once a particular stock price threshold is reached, in this case, set at $26.99—20% higher than the rate at the time of the fundraising announcement. This approach enables AST to secure funding without immediately issuing shares, offering investors a balance of downside protection through debt and potential upside via equity conversion.
Despite the apparent benefits, existing shareholders expressed concerns about dilution, leading to a 12% decrease in AST’s shares following the announcement. The specifics of the convertible notes include an interest rate of 4.25%, matured by 2032, with a capped call at $44.98, and netting AST approximately $387.9 million. The surge in AST shares by a notable 535% over the past year can be attributed to significant commercial and financing partnerships formed with industry giants Verizon and AT&T, as well as the successful launch of the company’s initial commercial satellites in September.
Furthermore, the Federal Communications Commission (FCC) recently granted AST a Special Temporary Authorization, allowing the commencement of testing for its direct-to-cell service in collaboration with AT&T. This regulatory approval permits AST’s five BlueBird satellites, launched in September, to begin operating. Financial reports show that the company had $567.5 million in cash and equivalents by the end of 2024, with an additional $388 million from the convertible bond issuance expected to boost AST’s financial reserves to almost $1 billion for the development of the extensive BlueBird constellation.
In a strategic move, AST inked deals to deploy 45 BlueBird satellites, with the option to extend the count to 60 by 2026, revealing that each satellite’s total cost, including direct materials and launch expenses, ranges from $19 million to $21 million. With plans to build a comprehensive constellation, the company estimates that the total outlay may reach around $1.2 billion, thereby highlighting the magnitude of the recent funding announcement’s significance in advancing AST’s ambitious venture.
Moreover, AST SpaceMobile solidified a crucial agreement with Ligado Networks to transfer 40 MHz of L-band Mobile Satellite Service (MSS) spectrum, aiming to enhance coverage and achieve connectivity speeds of up to 120 Mbps. The collaboration underscores AST’s commitment to expanding its reach and capabilities in the competitive sector of satellite communication. With a robust financial foundation and strategic partnerships in place, AST SpaceMobile remains poised to drive innovation and transformation within its industry.
