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Lynk forges ahead with public market debut despite SPAC’s dwindling reserves

Satellite to Phone Connectivity Provider Global Link will head to the public markets through a merger with a shell company run by former professional baseball player Alex Rodriguez.

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

However, much of the capital in the transaction will not come from the SPAC itself. In that same presentation, Lynk says that around $800 million of the new capital will come from renewing existing equity capital, $110 million from private investment in public equity (PIPE), and a scant $25 million from cash held in trust by the SPAC. .

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

The company hopes that its proprietary technology, which is compatible with any unmodified cell phone, even those operating on 2G networks, can compete with these larger, better-capitalized players. The business model is also a little different: Lynk plans to hire mobile network operators (MNOs) and telecom providers, and these partnerships will help the company take advantage of these companies’ existing in-orbit spectrum rights.

“Our goal is to position Lynk as the trusted wholesale provider for ORMs, not directly to the consumer,” the company explains. “Lynk’s technology can enable MNOs to expand network coverage while still owning the relationship with their subscribers.”

Basically, Lynk would provide minimal coverage where networks don’t have it, allowing emergency messaging and other services anywhere on the planet. It’s up to them whether networks charge extra for certain services (although emergency connectivity would always be free), offer it as a value-add to their existing prices, or find some other way to capitalize on the feature.

The company also says its satellites are ready for mass production, now requiring just a month each to assemble and costing around $650,000 to launch, according to the presentation.

The funding will be used to increase production to 12 satellites per month; At that pace, Lynk told investors it aims to have 74 satellites in service by the fourth quarter of 2025, generating $175 million a month in annualized revenue.

Over the past two years, a wave of space companies have headed to the public markets by bypassing the traditional Initial Public Offering and merging with a SPAC. But the vast majority of them have not met their revenue projections; many, including Spire, Momentus and Satisfy, received delisting warnings for failing to keep their share prices above $1. Others, like Astra and Terran Orbital, simply faced the threat of being delisted.

Slam Corp has also had its own problems: Although the company raised $575 million from public investors in February 2021, it has since had to return the vast majority of those funds due to continued shareholder redemptions after the company could not find a promising merger prospect. Lynk provides only $25 million from that trust, which represents a shareholder repayment rate of 96%.

But despite this background, Lynk clearly sees a different future for Nasdaq. The transaction is expected to be completed sometime in the second half of the year, after which Lynk will trade under the ticker symbol $LYNK.



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