The company has announced a further positive financing development with the securing of $100m of Super Senior Debt with a coupon of 7.5% that provides a significant reduction in interest payable on around 10% of outstanding gross debt. The recent trading updates are less positive and we have reduced our expectations accordingly. In addition, we still await a launch date for HYLAS 4 which is a crucial factor in attaining the required revenue and cash flow development. The fair value for the equity falls to 93p from 109p previously with our longer-term assumptions unaltered.
Super Senior Debt issue a positive sign
The $100m 7.5% Super Senior Debt line has been secured from HPS Investment Partners, who have $39bn of assets under management, and this is a positive for Avanti Communications Group Plc (LON:AVN). Not only is a notable investor showing confidence in the model, but the terms also provide a significant interest saving on 10% of the outstanding gross debt. As previously, we assume all the available payments in kind (PIKs) are enacted which will take gross debt to almost $1bn. Improved terms for existing bondholders to compensate for the loss of seniority will offset this to a degree, but the liquidity provided will further underpin Avanti as it prepares for the major capacity addition that should be provided by HYLAS 4. We now expect a launch around the turn of the year although a final date has yet to be confirmed.
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