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 Networks lists assets and liabilities of between $1 billion and $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 are listed as the two largest unsecured creditors, but the amounts owed are not disclosed.

As part of a restructuring support agreement, Ligado Networks 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 Networks stated its debt would be reduced from $8.6 billion to approximately $1.2 billion.

Ligado Networks filed a lawsuit against the US government in October 2023, alleging it took some of its Federal Communications Commission-licensed spectrum for use by the Department of Defence without compensation, which the company alleges prevents it from launching its own 5G operations.

In November 2024, a federal judge ruled Ligado Networks could continue its lawsuit after the US government sought to dismiss it.

The satellite operator stated it would pursue its claims during its Chapter 11 proceedings.

AST SpaceMobile deal
As part of Ligado Networks’ 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 the company, plus access to an additional 5MHz in the 1670MHz to 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 chair and CEO Abel Avellan.

The Ligado Networks spectrum will be in addition to the 850MHz spectrum from AT&T and Verizon which AST SpaceMobile plans to use.

A representative for AT&T told Mobile World Live while it is still too early to know what a final transaction would look like, “any additional spectrum made available for a satellite direct-to-cellular service will help improve coverage and service capabilities”.

“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 Networks 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 an additional consideration of approximately $550 million.

AST SpaceMobile will pay approximately $80 million annually for spectrum usage rights while also providing Ligado Networks with long-term net revenue-sharing rights.

Analyst Tim Farrar with TMF Associates posted on X it seems likely almost all the money from AST SpaceMobile would be 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.