Filing Overview
Registrant: New Providence Acquisition Corp. (NPA), a special purpose acquisition company that proposed combining with AST & Science LLC, the predecessor to AST SpaceMobile, Inc. The Form 8-K was dated December 15, 2020 and reported entry into a definitive equity purchase agreement and related financing agreements.
The filing is a transaction announcement rather than a periodic financial report. It does not provide a clear revenue, earnings, cash flow, margin, debt, or liquidity comparison for AST or NPA.
Business Combination and Transaction Terms
- At closing, NPA would change its name to AST SpaceMobile, Inc. and use an umbrella partnership-C corporation structure, with substantially all operating assets held by AST.
- NPA would contribute to AST the cash remaining in its trust account after shareholder redemptions, plus PIPE proceeds and any additional PIPE proceeds, less deferred underwriting commissions and transaction expenses.
- NPA warrants would convert into warrants to purchase PubCo Class A common stock on substantially the same terms.
- The proposed capital structure included Class A common stock with economic and voting rights, Class B common stock with voting rights but no economic rights for AST existing equityholders, and Class C common stock with ten votes per share but no economic rights for Abel Avellan.
- The post-closing board was expected to initially comprise 13 seats, including three vacancies. Abel Avellan would have rights to nominate seven directors, while certain AST equityholders and the Sponsor would have additional nomination rights.
Financing and Key Financial Terms
| Item | Reported terms |
|---|---|
| PIPE investment | 23,000,000 PubCo Class A shares at $10.00 per share, for aggregate gross proceeds of $230,000,000. |
| Minimum closing cash | Trust Account proceeds after redemptions, plus PIPE and additional PIPE proceeds, had to equal at least $250,000,000 at closing. |
| Minimum tangible net assets | NPA had to have at least $5,000,001 in tangible net assets immediately before closing. |
| NPA indebtedness | NPA was required to have no indebtedness at closing. |
| Sponsor forfeiture | If trust and private financing proceeds before transaction expenses were below $400,000,000, the Sponsor would forfeit sufficient shares so its remaining Sponsor Stock represented 20% of NPA common stock immediately before closing. |
| Tax Receivable Agreement | PubCo would generally pay eligible AST equityholders 85% of realized or deemed tax savings from specified tax attributes and related deductions. |
The filing does not state the amount then held in the Trust Account, total transaction expenses, AST revenue or profitability, projected cash burn, or post-transaction capitalization after redemptions and sponsor forfeiture.
Material Changes and Status
- The definitive agreement was signed on December 15, 2020 and was unanimously approved by NPA’s board and AST’s board of managers.
- The transaction remained subject to NPA shareholder approval, regulatory and other customary closing conditions, Nasdaq listing, minimum cash and tangible-net-asset requirements, and the absence of a continuing material adverse effect.
- The parties could terminate the agreement if closing had not occurred by March 15, 2021, or by a subsequently extended outside closing date, among other customary termination events.
- No termination fee or expense reimbursement was required upon termination.
- The PIPE shares and shares issued to AST existing equityholders were intended to be issued in reliance on exemptions from Securities Act registration.
Outlook, Commentary, and Risks
NPA stated that it intended to file a preliminary proxy statement and solicit shareholder approval. The filing included an investor presentation and press release, but the provided text does not contain clear operating or financial guidance.
Key risks identified include failure to obtain shareholder or regulatory approval, inability to satisfy minimum cash or other closing conditions, termination of the agreement, competing acquisition proposals, loss of Nasdaq listing, transaction-related disruption and costs, legal proceedings, changes in law or regulation, competition, inability to grow profitably, and difficulty retaining key employees. The filing also cautions that forward-looking statements are subject to significant uncertainties and should not be relied upon as guarantees.
Important Facts for Investors to Verify
- Whether the transaction ultimately closed and the date and terms of the completed combination.
- Actual Trust Account balance, shareholder redemptions, additional PIPE financing, transaction expenses, and net cash delivered at closing.
- Final post-closing ownership, including Sponsor forfeitures, AST equityholder interests, public shareholders, and PIPE investors.
- AST SpaceMobile’s historical and projected revenue, operating losses, cash burn, capital requirements, debt, and liquidity.
- The final terms and financial impact of the Tax Receivable Agreement and any related-party arrangements.
- Subsequent proxy materials, audited financial statements, risk factors, closing conditions, and any amendments or termination notices.