AST Spacemobile, Inc. current report, 02 July 2022

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Business Context and Reporting Period

AST SpaceMobile, Inc. filed a Form 8-K dated July 2, 2022, reporting a proposed sale of its subsidiary interest in UAB NanoAvionics. AST & Science, LLC, a subsidiary of AST SpaceMobile, agreed with Kongsberg Defence & Aerospace AS and other sellers to sell its 51% interest in NanoAvionics.

Transaction and Key Financial Metrics

  • Purchase price: no less than €65.0 million in total enterprise value for NanoAvionics.
  • Estimated cash consideration to AST & Science: approximately €27 million, based indicatively on NanoAvionics’ May 2022 balance sheet accounts.
  • Consideration remains subject to customary working-capital and net-debt adjustments.
  • The filing provides no company-level revenue, profit, cash-flow, margin, debt, or liquidity figures for the reporting period.

Material Changes and Unusual Items

The proposed transaction would monetize AST SpaceMobile’s 51% ownership interest in NanoAvionics. In connection with closing, AST & Science is expected to enter into a cooperation agreement with NanoAvionics covering ongoing commercial arrangements.

InMotion Holdings, LLC, wholly owned by AST SpaceMobile’s Chief Executive Officer and Chairman, Abel Avellan, is expected to receive approximately €7.7 million under an option it holds to acquire NanoAvionics shares. The filing states that AST SpaceMobile has no interest in those shares.

Outlook, Conditions, and Risks

  • Closing was expected in the third quarter of 2022, but completion was not guaranteed.
  • Closing conditions include required regulatory approvals, investment screening approval, and, if required, approval by the Committee on Foreign Investment in the United States.
  • The transaction is also subject to the absence of prohibitive governmental orders, material compliance with pre-closing obligations, and customary accuracy of representations and warranties.
  • The transaction is not subject to a financing condition.
  • The filing does not provide management guidance regarding the use of proceeds, expected accounting gain or loss, tax effects, or the transaction’s impact on future results.

Important Facts for Investors to Verify

  1. Whether the transaction closed and the final proceeds received by AST & Science.
  2. Final working-capital and net-debt adjustments and the resulting consideration.
  3. Any required regulatory or CFIUS approvals and other closing conditions.
  4. The terms and economic effects of the post-closing cooperation agreement.
  5. The accounting, tax, liquidity, and capital-allocation effects of the NanoAvionics sale.
  6. The related-party payment to InMotion Holdings and its treatment in subsequent filings.