REG - Filtronic PLC - Strategic Agreement with SpaceX

FiltronicAnnouncement

24/04/2024 07:00

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RNS Number : 7915L  Filtronic PLC  24 April 2024

 

 

24 April 2024

Filtronic plc

("Filtronic" or the "Company")

 

Strategic Agreement with SpaceX for Starlink constellation

 

Filtronic secures a long-term partnership with SpaceX in the LEO space market

 

Filtronic plc (AIM: FTC), the designer and manufacturer of products for the
aerospace, defence, space and telecoms infrastructure markets, is delighted to
announce that it has entered into a strategic partnership and commercial
agreement (the "Strategic Partnership") with Space Exploration Technologies
Corp. ("SpaceX"), which designs, manufactures, launches and operates the
world's most advanced rockets and spacecraft. The Strategic Partnership
includes the ongoing supply of E-band Solid State Power Amplifiers ("SSPA") in
addition to the development and supply of similar products at other frequency
bands within SpaceX's Starlink platform.

 

The Strategic Partnership contract was executed with an initial irrevocable
purchase order of $19.7m (£15.8m) to supply E-band SSPA modules, scheduled
for delivery in FY2025, with further order flow expected to continue
thereafter to support the ongoing deployment of SpaceX's Starlink
constellation, which provides high-speed, low-latency high-speed internet to
users all around the world.

 

As part of the Strategic Partnership, the Company has is issuing a total of
21,712,109 warrants to SpaceX across two tranches, to enable SpaceX to
subscribe for up to a maximum of 10% of the Company's existing share capital,
with such warrants expected to vest, on a variable basis, with full vesting of
the warrants once approximately $60m (£48m) of orders have been placed by
SpaceX. The two warrant tranches, which are split equally, are detailed below:

 

Tranche 1: a maximum of 5% vesting on a variable basis from order flow of the
E-band SSPA platform; and

Tranche 2: a maximum of a further 5%, also vesting on a variable basis, for
order flow of products developed at alternative frequency bands which would
involve partnering with SpaceX on new product development.

 

Summary of Warrant Terms

 

1)           Filtronic is issuing SpaceX with equity warrants up to
a maximum of 5% of its existing share capital (10,856,055 warrants) and such
warrants will vest based on the receipt of purchase orders against a staged
vesting profile for E-band SSPA modules. All warrants in this tranche will
fully vest once SpaceX has placed a minimum of $37m (£30m) of irrevocable
purchase orders with Filtronic.

 

2)           Filtronic is issuing SpaceX with additional equity
warrants up to a maximum of another 5% of its existing share capital
(10,856,054 warrants). Such warrants will vest based on the receipt of
purchase orders, against a staged vesting profile for SSPA modules at other
operational frequency bands. The warrants in this tranche will fully vest on a
similar profile to those in point 1.

 

3)           The strike price for the warrant 33 pence, being the
closing mid-market price of Filtronic's ordinary shares of 0.1p each on 23
April 2024, being the last business day before the Strategic Partnership
contract was executed.

 

4)           SpaceX must place a minimum order value in each
subsequent 12-month period from the Contract Date of $10m to be delivered
within 12 months. SpaceX must also maintain a cadence of order flow, so that
the timing between purchase orders does not surpass a 12 month-period. If
order flow is not maintained in accordance with these two tests, within the
5-year warrant period, then the warrants will expire 6 months from that date.

 

5)           The warrants will expire five (5) years from the date
the Strategic Partnership contract was executed. The warrants will expire
earlier if certain minimum order volumes are not met by SpaceX. Vested
warrants can be exercised in whole (or in part, in minimum amounts of 500,000)
at any time prior to their expiration, to the extent the agreed vesting
conditions have been satisfied.

 

21,512,000 of the warrants are being issued utilising (to their full extent in
this particular regard) the existing shareholder authorities granted at the
Annual General Meeting of the Company held in October 2023, with the remaining
balance (of 200,109 warrants) to be issued following the grant of similar
authorities at this year's Annual General Meeting.

 

Richard Gibbs, Chief Executive Officer, of Filtronic commented: "We are
delighted to enter into this important Strategic Agreement with SpaceX, a
market leader in LEO satellite constellations. This milestone development in
our SpaceX partnership underlines our core value proposition of high-quality
engineering and operational excellence. It also provides Filtronic with the
opportunity to scale manufacturing, build capability and execute our
technology roadmap.  The team at Filtronic are excited to formalise and
develop our existing relationship with SpaceX and secure the ongoing supply of
E-band SSPAs. We also look forward to working alongside the SpaceX engineering
team to develop new products for use in the Starlink system."

 

Mike Nicolls, SpaceX's Vice President of Starlink Engineering commented:
"Filtronic has been an outstanding supplier for Starlink. They have matched
our rate ramp and increasing demand for high-quality parts. Their strong
engineering teams have taken ownership of their production process to meet our
needs, taking their designs from wafer to functional unit, and are delivering
quality parts in E-band which will enable the Starlink network to continue to
grow and connect millions of more people around the world with high-speed,
low-latency broadband internet."

 

 

Enquiries:

 Filtronic plc                                              Tel. 01740 618800 or investor.relations@filtronic.com
                                                            (mailto:investor.relations@filtronic.com)
 Richard Gibbs (Chief Executive Officer)
 Michael Tyerman (Chief Financial Officer)

 Cavendish Capital Markets Limited                          Tel. 020 7220 0500
 Jonny Franklin-Adams/George Dollemore (Corporate Finance)
 Sunila de Silva (ECM)

 Walbrook PR Limited                                        Tel. 020 7933 8780 or filtronic@walbrookpr.com
                                                            (mailto:filtronic@walbrookpr.com)
 Nick Rome

 Joe Walker

 

 

Note: This announcement contains inside information which is disclosed in
accordance with the Market Abuse Regulation.

 

 

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