AST SpaceMobile Finalizes $1 Billion Convertible Senior Notes Offering at 1.625% Interest Rate

Details on Convertible Notes Structure and Terms

On July 20, 2026, AST SpaceMobile completed the issuance of $1.0 billion principal amount of 1.625% Convertible Senior Notes due 2034. The notes were issued under an indenture dated the same day between the company and U.S. Bank Trust Company, National Association, acting as trustee. Interest accrues at 1.625% annually from issuance and is payable semiannually in arrears on February 1 and August 1, starting February 1, 2027. Unless converted or repurchased earlier, the notes mature on February 1, 2034.

The offering includes a greenshoe option allowing initial purchasers to acquire an additional $150 million principal amount of notes within a 13-day settlement period beginning July 20, 2026. Notes issued on the closing date exclude any issued under this option. As unsecured obligations, the notes rank equally with other unsecured debt but may rank below secured debt and other liabilities.

Conversion Rights and Pricing Structure

The initial conversion rate is 12.5672 shares of Class A Common Stock per $1,000 principal amount, equating to an initial conversion price of approximately $79.57 per share. This price represents a roughly 20% premium over the last reported sale price of AST SpaceMobile’s Class A Common Stock on the Nasdaq Global Select Market on July 15, 2026. The conversion rate is subject to adjustments for certain events as outlined in the indenture, excluding accrued and unpaid interest.

Noteholders may convert their notes under three conditions: (1) during any calendar quarter after the quarter ending December 31, 2026, if the stock’s last reported sale price is at least 130% of the conversion price for 20 trading days within a 30-day period ending on the last trading day of the prior calendar quarter; (2) within five business days following any 10 consecutive trading day period where the note price falls below 98% of the product of the stock price and conversion rate; and (3) upon specified corporate events detailed in the indenture.

Conversion Rights Post-November 2033

Starting November 1, 2033, until the close of business two trading days before maturity, holders have unrestricted rights to convert any or all notes in $1,000 principal increments without compliance with prior stock price conditions. This provision ensures holders have full conversion flexibility approaching maturity.

Additionally, if certain corporate events occur before maturity, the company will increase the conversion rate for holders converting in connection with those events to protect against dilution, as specified in the indenture.

Redemption Limitations and Fundamental Change Repurchase Rights

The company cannot redeem the notes before maturity, and no sinking fund has been established. This contrasts with some convertible notes that allow issuer redemption at predetermined times and prices, providing holders with greater certainty of note duration.

In the event of a "fundamental change" as defined in the indenture, holders may require the company to repurchase all or part of their notes at 100% of principal plus accrued interest, subject to certain conditions and exceptions. This repurchase right offers liquidity protection if significant changes in company control or business occur.

Events of Default and Covenant Provisions

The indenture contains standard covenants and specifies events of default that accelerate note repayment. Events include failure to pay interest within 30 days, failure to pay principal at maturity or required repurchase, failure to convert notes within five business days after valid notice, failure to provide notices related to fundamental changes or corporate transactions, and breaches of consolidation, merger, or asset sale obligations.

Additional defaults arise if the company fails to meet other indenture obligations for 60 days after written notice from the trustee or holders of at least 25% of outstanding notes. A cross-default provision applies if the company or a significant subsidiary defaults on secured indebtedness exceeding $50 million, triggering default under the convertible notes.

Bankruptcy and Insolvency Default Provisions

The indenture specifies automatic default events upon certain bankruptcy or insolvency proceedings involving the company, requiring no further notice or action. These provisions ensure immediate acceleration of notes, protecting noteholders in financial distress scenarios.

The trustee and noteholders may declare all notes immediately due and payable upon any event of default, subject to applicable notice and cure periods, providing strong enforcement rights to safeguard creditor interests.

Use of Proceeds and Impact on Capital Structure

The company has not disclosed specific plans for the $1.0 billion gross proceeds from this convertible notes offering. Investors should watch for future disclosures or presentations for details on capital allocation priorities. Potential uses may include satellite operations, network infrastructure, or other strategic initiatives.

This $1.0 billion convertible debt issuance affects AST SpaceMobile’s capital structure and leverage profile. The low 1.625% coupon reflects embedded equity conversion value, enabling the company to raise capital at below-market interest rates while offering investors equity upside if the stock price exceeds the $79.57 conversion price. The February 1, 2034 maturity provides nearly eight years for operational progress or refinancing.

Investor Considerations on Conversion Premium and Dilution

The 20% premium on the conversion price relative to the July 15, 2026 stock price aligns with typical convertible offering terms, providing investors downside protection through fixed income yield and principal repayment if the stock underperforms. Conversely, significant stock price appreciation above $79.57 incentivizes conversion to equity, allowing noteholders to capture value gains.

If fully converted, approximately 12.567 million shares of Class A Common Stock would be issued based on the $1.0 billion principal and conversion ratio of 12.5672 shares per $1,000 principal. Investors should weigh this potential dilution against capital raised and management’s use of proceeds to enhance enterprise value.