Avanti Communications Group (LON:AVN) has today announced a refinancing of its operations with the existing bondholders providing an additional $130m of new funds on completion, with a further $112m of liquidity provided by potential interest payment deferrals up to April 2018. The company can now proceed to more than double its available Ka-band capacity by launching the HYLAS 4 satellite later this year. The focus will be on filling the capacity at planned pricing, particularly to sub Saharan Africa. Revised guidance of 35% top line growth implies a longer journey for equity holders, but that can at least continue. When 2016 accounts are available, we will reinstate our revised forecasts and a view of the equity potential.
In addition to the new money, bond interest payments totalling $112m over 18 months can be taken as payments in kind. The bond maturity has been extended until 2022. There is a 9.09% equity placing attached to the new bond issue, which is quite modest compared to some expectations. Bond interest is at 12%. Completion will take several weeks, but the refinancing has the backing of 73% of the existing bondholders. The new terms appear to confirm their confidence in the Avanti business model’s ability to generate future positive cash flows. While some commentators had assumed Avanti would fail, leaving the equity worthless, this has not been the case. The takeover route appears to have been confounded by a belief the bondholders were seeking an exit. Several external offers are said to have been received but were rebuffed.
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