AST SpaceMobile announces proposed private offering of convertible senior notes

AST SpaceMobile also intends to grant the initial purchasers of the notes in the offering an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $60.0 million aggregate principal amount of notes.

The notes will be senior, unsecured obligations of AST SpaceMobile, will accrue interest payable semiannually in arrears and will mature on March 1, 2032, unless earlier converted, redeemed or repurchased. The notes will be convertible into cash, shares of AST SpaceMobile’s Class A common stock, or a combination thereof, at AST SpaceMobile’s election. The interest rate, initial conversion rate, and other terms of the notes are to be determined upon pricing of the offering.

AST SpaceMobile intends to use a portion of the net proceeds from the offering to pay the cost of the capped call transactions described below. AST SpaceMobile intends to use the remaining net proceeds from the offering for working capital or other general corporate purposes, which may include other strategic transactions. If the initial purchasers exercise their option to purchase additional notes, AST SpaceMobile expects to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions with the option counterparties (as defined below), with the remainder of the net proceeds to be used for general corporate purposes as set forth in the preceding sentence.

In connection with the pricing of the notes, AST SpaceMobile expects to enter into capped call transactions with one or more of the initial purchasers of the notes or affiliates thereof and/or other financial institutions (the “option counterparties”). The capped call transactions will cover, subject to customary adjustments, the number of shares of AST SpaceMobile’s Class A common stock initially underlying the notes. The capped call transactions are expected generally to reduce the potential dilution to AST SpaceMobile’s Class A common stock upon any conversion of notes and/or offset any cash payments AST SpaceMobile is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap.

In connection with establishing their initial hedges of the capped call transactions, AST SpaceMobile expects the option counterparties or their respective affiliates will enter into various derivative transactions with respect to AST SpaceMobile’s Class A common stock and/or purchase shares of AST SpaceMobile’s Class A common stock concurrently with or shortly after the pricing of the notes, including with, or from, as the case may be, certain investors in the notes. This activity could increase (or reduce the size of any decrease in) the market price of AST SpaceMobile’s Class A common stock or the notes at that time.

In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to AST SpaceMobile’s Class A common stock and/or purchasing or selling AST SpaceMobile’s Class A common stock or other securities of AST SpaceMobile in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during the 20 trading day period beginning on the 21st scheduled trading day prior to the maturity date of the notes, or, to the extent AST SpaceMobile exercises the relevant termination election under the capped call transactions, following any repurchase, redemption or conversion of the notes).

This activity could also cause or avoid an increase or a decrease in the market price of AST SpaceMobile’s Class A common stock or the notes, which could affect a noteholder’s ability to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the number of shares, if any, and value of the consideration that a noteholder will receive upon conversion of its notes.

The notes will only be offered and sold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act by means of a private offering memorandum. Neither the notes nor the shares of AST SpaceMobile’s Class A common stock potentially issuable upon conversion of the notes, if any, have been, or will be, registered under the Securities Act or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, such registration requirements.