Ligado Files for Chapter 11; AST SpaceMobile 'Key' to Restructuring
Ligado will partner with AST SpaceMobile on direct-to-device (D2D) service, with AST compensating Ligado for access to Ligado spectrum. The arrangement comes as part of a Ligado restructuring of its debt announced Monday, a day after Ligado filed for Chapter 11 bankruptcy protection.
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In its Chapter 11 petition, filed Sunday with the U.S. Bankruptcy Court in Delaware (docket 25-10009), Ligado said holders of unsecured claims include Inmarsat and Boeing. Ligado has access to more than 40 MHz of mobile satellite service (MSS) spectrum in North America and 35 MHz of terrestrial spectrum in the U.S.
Ligado said Monday it had reached a restructuring agreement with holders of roughly 88% of its debt that would see about $7.8 billion of existing debt converted into equity. In addition, it's using the bankruptcy proceeding to carry out that restructuring agreement. It said its AST agreement, with AST having access to its L-band MSS spectrum, is "a key element" of the restructuring.
AST CEO Abel Avellan said that the agreement on Ligado's lower midband spectrum in the U.S. "gives us long-term access to a large block of a scarce resource, significantly enhancing our planned space-based cellular broadband offering." Avellan added, "Alongside the previously announced 850 MHz nationwide network plans, access to the largest available block of high-quality nationwide spectrum will position us to deliver on our goal of peak data transmission speeds up to 120 Mbps, together with our mobile network operator partners, to enable a true broadband experience directly from space to everyday smartphones."
The Ligado/AST arrangement "is a major milestone" for D2D, CCS Insight analyst Luke Pearce wrote Monday. There were concerns about spectrum interference and the need for geographic exclusion zones regarding AST's approach, he said. Securing a sizable portion of dedicated L-band MSS spectrum gives AST "an alternative path forward -- offering less restrictive direct-to-device services with strong bandwidth." That could give AST an edge over D2D service SpaceX's Starlink is offering, he said.
AST said that under the terms of its agreement, it will give Ligado 4.7 million stock options. Contingent on regulatory approval for the proposed use of the spectrum, it will also pay roughly $550 million to Ligado, as well as $80 million annually for spectrum usage rights, and that Ligado would have revenue-sharing rights. Given the financial costs, AST "must be confident in its ability to generate substantial revenue in the US and Canada alone to justify this investment," Pearce said.
The Chapter 11 filing stems from "large operational losses Ligado suffered due to the U.S. government’s unlawful taking without just compensation of Ligado’s licensed spectrum," the company said. It spent the past year trying to craft an agreement with Inmarsat owner Viasat that would restructure Ligado's payment obligations to Inmarsat. Ligado has litigation pending before the U.S. Court of Federal Claims alleging the federal government has effectively terminated its L-band license (see 2411180023). Ligado said the Chapter 11 filing lets it "take advantage of the post-filing period to pursue its lawsuit against the U.S. government and continue advancing its mobile satellite plans and building the L-Band commercial ecosystem for its spectrum assets."