US satellite communications company Ligado Networks filed for bankruptcy as part of a move to address near-term liabilities, while also striking an agreement with AST SpaceMobile for long-term access to up to 45MHz of lower mid-band spectrum in the US.
According to a Chapter 11 petition filing in the US state of Delaware, Ligado lists assets and liabilities of between $1 billion to $10 billion. The filing allows the satellite operator to continue operations as it implements a plan to repay creditors.
Viasat-owned Inmarsat Global Limited and Boeing Satellite Systems Inc. are listed as the two largest unsecured creditors, but the amounts owed are not disclosed.
As part of a restructuring support agreement, Ligado stated a significant portion of its supporting creditors hold approximately 88 per cent of its funded indebtedness.
The supporting creditors agreed “to provide a fully backstopped financing commitment to provide $115 million of additional incremental financing to fund Ligado during the restructuring process”.
Once it emerges from Chapter 11, Ligado stated its debt will be reduced from $8.6 billion to approximately $1.2 billion.
Ligado filed a lawsuit against the US government in October 2023, alleging it took some of its Federal Communications Commission-licenced spectrum for use by the Department of Defense without compensation, which Ligado alleges prevents it from launching its own 5G operations.
In November 2024, a federal judge ruled Ligado could continue its lawsuit after the US government sought to dismiss it. The satellite operator stated it will pursue its claims during its Chapter 11 proceedings.
AST SpaceMobile deal
As part of Ligado’s ongoing restructuring, AST SpaceMobile will receive long-term spectrum usage rights for more than 80 years to up to 40MHz of L-Band mobile satellite services (MSS) spectrum in the US and Canada held by Ligado, plus access to an additional 5MHz in the 1670-1675MHz Band in the US.
“Adding premium lower mid-band spectrum access in the United States to the AST SpaceMobile network gives us long-term access to a large block of a scarce resource, significantly enhancing our planned space-based cellular broadband offering,” stated AST chairman and CEO Abel Avellan.
The Ligado spectrum will be in addition to the 850MHz spectrum from AT&T and Verizon that AST SpaceMobile plans to utilise.
A representative for AT&T told Mobile World Live that while it is still too early to know what a final transaction will look like “any additional spectrum made available for a satellite direct to cellular service will help improve coverage and service capabilities for that service”.
“We are excited about this potential additional spectrum.”
The transaction is subject customary closing conditions and the completion of legally binding contracts, which is expected to occur during the first half of 2025.
Once it is closes, Ligado will receive approximately 4.7 million penny warrants convertible into AST SpaceMobile Class A shares, subject to a 12-month lock-up.
It will also receive additional consideration of approximately $550 million.
AST SpaceMobile will further pay approximately $80 million annually for spectrum usage rights while also providing Ligado with long-term net revenue sharing rights.
Analyst Tim Farrar with TMF Associates posted on X that it seems likely almost all the money from AST SpaceMobile will used to pay Viasat, which means “any return for the debt holders will depend on a successful resolution of the litigation against the US government”.
“And the unmentioned issue, this means a substantial redesign of AST’s satellites for higher frequencies and potentially more complexity and delays at the FCC,” he added.
The post Ligado files for chapter 11; strikes AST deal appeared first on Mobile World Live.
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