TAMPA, Fla. — Lynk Global plans to list shares on Nasdaq to expand its direct-to-smartphone constellation by merging with Slam Corp, a publicly traded shell company led by former professional baseball player Alex Rodriguez.
The Falls Church, Virginia-based venture said Dec. 18 it has signed a non-binding letter of intent with Rodriguez’s special purpose acquisition company (SPAC) to form a group they expect to be valued at $800 million.
The companies are still working out details of their combination, Lynk vice president of government affairs Tony DeTora told SpaceNews, and it is too early to speculate how much the satellite operator could raise from the deal.
Lynk currently provides intermittent texting and other low-bandwidth connectivity services with three pizza-box-shaped satellites in parts of the Solomon Islands, Cook Islands, and Palau via partnerships with local mobile operators.
DeTora said the six-year-old venture is preparing to launch two more small satellites on SpaceX’s next Falcon 9 rideshare mission early next year to improve coverage and latency.
The company needs more funds behind plans to ultimately reach 5,000 satellites in low Earth orbit, enough to provide continuous services worldwide so telco partners can keep subscribers connected beyond the reach of cell towers — including across regions with higher average revenue per user, such as the United States.
A spate of early-stage space companies have raised sizable funds for their capital-intensive businesses in recent years through a SPAC merger, which does not require the level of due diligence involved in a traditional IPO process.
However, many space companies that recently merged with a SPAC have missed revenue targets, helping to cast a dark cloud over this fundraising tool as their shares heavily underperform the broader public market.
Israeli satcom equipment maker SatixFy became the latest space firm Dec. 1 to face being removed from a stock exchange following a prolonged share price slump.
Lynk would join Nasdaq alongside rival direct-to-smartphone player AST SpaceMobile, which raised $417 million from investors in April 2021 by merging with a SPAC called New Providence Acquisition Corp.
AST SpaceMobile has been burning through cash reserves following manufacturing delays and cost overruns for bigger satellites that promise more capacity than Lynk’s initial spacecraft.
The Texas-based venture recently took on debt and raised more equity to fully fund plans to deploy its first five commercial satellites early next year, and is in talks with strategic investors for more funds to expand the constellation.
Slam raised $575 million from its initial public offering in February 2021 and originally had a two-year deadline to merge with a compelling investment opportunity.
While Slam’s shareholders approved extending this deadline to February 2024, the SPAC had to return $328 million after some investors opted to redeem their shares.
Slam said in a Dec. 18 news release it expects to nail down a merger agreement with Lynk within weeks, but it needs shareholder permission for another deadline extension because the companies expect to close any deal in the second half of 2024.
The SPAC has scheduled a Dec. 22 shareholder meeting for approval to extend the date it must complete a business combination up to Dec. 25, 2024.
The emerging direct-to-smartphone market also faces regulatory hurdles in addition to funding challenges. Lynk Global and AST SpaceMobile rely on beaming mobile spectrum from their telco partners from space to reach subscribers, raising interference concerns.
SpaceX also seeks to use spectrum from terrestrial partners, and recently secured regulatory permission to test direct-to-smartphone services from upgraded Starlink broadband satellites slated to launch Dec. 28.
Starlink is on track to enable connectivity for texting services in 2024, SpaceX’s website states, with voice and connectivity for Internet of Things devices set to come the year after.