AST SpaceMobile, Inc. (NASDAQ:ASTS) has announced the terms for a $1 billion convertible bond offering, a move designed to replenish its cash reserves after a significant second-quarter drawdown. The deal is expected to bring the company's cash and restricted cash to approximately $3.61 billion on a pro forma basis, representing a modest 4.4% increase from its March 31 balance of $3.459 billion. This comes after the company reported a preliminary cash balance of $2.723 billion as of June 30, reflecting a $735.9 million decline in the second quarter.
The timing of the offering is critical, as AST SpaceMobile has pushed back its satellite launch timeline. According to its latest regulatory filing, the company now aims to launch approximately 45 BlueBird satellites by early 2027, moving its target from the end of 2026. The company needs between 45 and 60 satellites to achieve near-persistent service in its key markets. The delayed timeline means a longer wait before its network can offer widespread commercial service, which has weighed on investor sentiment.
Shares of AST SpaceMobile fell about 10% in premarket trading on Thursday, sliding to $59.70, as traders reacted to the bond pricing and the extended launch schedule. The stock had closed at $66.30 the previous day, according to market data.
Most of the proceeds from the bond will be used to backfill the liquidity that was consumed in the second quarter. The company estimates net proceeds of $983.6 million from the base deal, with $96.9 million allocated to capped calls—a hedging strategy to limit dilution up to a certain stock price. This leaves net cash proceeds of approximately $886.7 million. The preliminary June filing does not break out unrestricted versus restricted cash, so the $735.9 million drop should not be interpreted solely as operating cash burn.
The new bonds carry a lower coupon than the $1 billion convertible bond AST SpaceMobile closed in February. The July 2026 notes have an annual coupon of 1.625%, compared to 2.25% for the February 2026 notes. However, the initial conversion price is lower at $79.57 per share, compared to $116.30 for the February notes, giving investors more potential share exposure per dollar invested. Each $1 billion of the July notes reduces annual interest by $6.25 million but implies approximately 46% more shares at the initial conversion rate. The company can settle conversions in cash, stock, or a combination. The capped call is designed to counter dilution up to $149.20 per share.
AST SpaceMobile stated that it may use the remaining funds to 'secure additional access to orbit,' potentially through partnerships or acquisitions to reduce its dependence on external launch providers. However, no specific deals are in place. Based on a target of at least 90 satellites, direct materials and launch costs are estimated at $1.89 billion to $2.07 billion, representing 52% to 57% of pro forma liquidity. This comparison does not include ground systems and ongoing operating costs, and some satellite spending has already been incurred.
Japan could provide a potential offset. AST SpaceMobile is in advanced talks with its backer Rakuten Group, Inc. (TYO:4755) as RAST Co. has been selected for a potential subsidy of up to 148 billion yen, roughly $1 billion. While this amount matches the bond principal, the funds are earmarked for a Japanese infrastructure project and are not immediately available to AST SpaceMobile. The deal and joint venture discussions remain pending.
Piper Sandler analyst Alexander Potter initiated coverage on Wednesday with a Buy rating and a $100 price target, representing a 50.8% upside from the prior day's close. Despite the analyst's optimism, shares fell in premarket trading as the market focused on the funding needs and delayed launch timeline.
The balance-sheet bridge is not a forecast. June liquidity figures could change, satellite testing and rocket schedules will determine launch timing, and the Japanese subsidy is not guaranteed. AST SpaceMobile's initial satellite costs are higher than expected, and if launches slow down or spending increases, the additional funds will be consumed more quickly. The notes are scheduled to settle on July 20. With this deal, AST SpaceMobile secures lower interest costs and extends its funding runway, but the recent numbers point to a slower rollout rather than a fully operational network. Investors will be watching the full second-quarter cash-flow update for insights into spending patterns.
