LINK moves ahead with public market debut despite SPAC's dwindling reserves

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Satellite-to-phone connectivity provider link global Will enter the public markets through a merger with a shell company led by former professional baseball player Alex Rodriguez.

The two companies confirmed the deal on Monday after announcing a non-binding LOI with Rodriguez's special purpose acquisition company (SPAC), Slam Corp, in December. According to An investor presentation filed with regulatorsThe deal could give Link a post-money valuation of $913.5 million.

However, most of the capital from the transaction will not come from the SPAC. In the same presentation, Link says approximately $800 million of the new capital will come from existing shareholder equity rollovers, $110 million from private-investment-in-public-equity (PIPE) and $25 million from cash held in trust by the SPAC. Will come from. ,

Link, which has already been done Entered some international commercial markets including Palau, looks to compete on an even larger scale with initiatives like Starlink's emerging sat-to-sell, Apple's Globalstar partnership, and AST Space Mobile (which completed its own SPAC merger in April 2021). Link has launched eight satellites that it calls “cell towers in space,” but eventually it plans to operate a constellation of 5,000 birds in low Earth orbit. The next two are expected to launch in March.

The company is hoping that its patented technology – which is compatible with any unmodified cell phone, even those operating on 2G networks – will be able to compete with these bigger and better-capitalized players. The business model is also a little different: Link plans to enter into contracts with mobile network operators (MNOs) and telecommunications providers, and these partnerships will help the company take advantage of these companies' existing spectrum rights in the orbit.

The company states, “Our goal is to establish Link as a reliable wholesale provider for MNOs, not direct to consumer.” “Link's technology can allow MNOs to expand network coverage while continuing to maintain relationships with their customers.”

Essentially, the link will provide minimal coverage where the network has none, making emergency messaging and other services available anywhere on the planet. Whether networks charge extra for some services (although emergency connectivity will always be free), or offer it as a value-add to their existing pricing, or find some other way to capitalize on the feature, is up to them. Is.

According to the presentation, the company further says its satellites are ready for mass production, with each now taking only a month to assemble and costing about $650,000 to launch.

The financing will be used to expand production to 12 satellites per month; At that rate, Link told investors it aims to have 74 satellites in service by the fourth quarter of 2025, which would generate annual revenue of $175 million per month.

Over the past two years a wave of space companies have turned to public markets by skipping traditional initial public offerings and instead merging with SPACs. But most of them have badly missed their revenue projections; Several, including Spire, Momentus and Satisfy, were given stock exchange delisting warnings for failing to keep their stock prices above $1. Others like Astra and Terran Orbital faced only the threat of delisting.

Slam Corp has its own troubles, too: The company raised $575 million from public investors in February 2021, only to have to return the vast majority of those funds due to ongoing shareholder redemptions after the company found no prospects for a promising merger. Is kept. Link expects only $25 million from that trust, assuming a 96% shareholder redemption rate.

But despite these track records, Link clearly sees a different future for itself on the Nasdaq. The transaction is expected to close sometime in the latter half of the year, after which LINK will trade under the ticker symbol $LYNK.