AST SpaceMobile, Inc. (NASDAQ: ASTS) has announced plans to raise $1.0 billion through a private offering of convertible senior notes maturing in 2034.
The Midland, Texas-based company is targeting qualified institutional buyers under Rule 144A of the Securities Act of 1933 for the proposed debt transaction.
AST SpaceMobile is also offering initial purchasers an option to buy up to an additional $150 million in notes, exercisable within a 13-day window beginning on the first issuance date.
The notes will function as senior, unsecured obligations of the company, with interest paid semiannually and a final maturity date of February 1, 2034.
Upon conversion, the notes can be settled in cash, shares of Class A common stock, or a combination of both, at the company’s discretion.
The interest rate, initial conversion rate, and other key terms will be finalized at the time of pricing, which remains subject to market conditions.
A portion of the proceeds will be used to fund capped call transactions designed to reduce potential dilution to existing Class A common stockholders upon any conversion of the notes.
The remaining net proceeds are earmarked for growth initiatives and securing additional orbital access for the company’s space-based cellular broadband network.
AST SpaceMobile has indicated the funds could also support partnerships or acquisitions aimed at further vertical integration and reducing dependence on third-party launch providers.
The company stated it currently does not have any understandings or agreements with respect to any such strategic transactions at this time.
AST SpaceMobile describes itself as building the first and only global cellular broadband network in space designed to work directly with standard, unmodified mobile devices.
The company says its mission is to deliver 4G and 5G space-based cellular broadband to the approximately 6 billion mobile subscribers worldwide using everyday smartphones.
In connection with the capped call transactions, option counterparties or their affiliates are expected to enter into derivative transactions or purchase Class A shares around the time of pricing.
That hedging activity could influence the market price of ASTS shares or the notes themselves, potentially affecting noteholders’ conversion outcomes during relevant observation periods.
