There’s little news from beleaguered speciality satellite operator Avanti Communications, other than it is rolling over its already expensive debt obligations by borrowing more cash to keep itself afloat. Avanti, in a September 16th update to its earlier ‘strategic review’ profits warning statement of July 11th, explained how talks were still on-going with potential buyers/funders but had nothing concrete to report.
In essence investors are concerned that cash and cash equivalents being held by Avanti has evaporated from $122 million back in March, to around $56 million now.
Avanti is asking its bondholders to accept additional secured Notes instead of a payment of $32.25 million due on October 1st. Investors who accept the new deal will get 10 per cent interest on their bonds, plus an additional $50 of promised repayment for every $1000 in principal that they tender for, plus $20 (in fresh debt) as well as $1.50 in cash. The end result means that Avanti’s immediate debt obligations of $32.25 million expands to $45.15 in new debt (assuming the bondholders take up the offer).
The September 16th statement also said that Avanti had managed to postpone paying $39 million in capital expenditure to the Hylas-4 satellite builder (Orbital ATK). The satellite is due for launch early next year.
The statement also spoke of revenues being down for the year, to $83 million from $85.2 million a year ago.
A more formal trading statement for its 12-months business (to June 30th) is now beginning to look well overdue, and into any near-vacuum there will flow plenty of comments from worried investors as well as a few bodies who have always been sceptical on Avanti’s prospects.
Typical is Tom Winnifrith (from the ‘Shareprofits’ blog-site) never a fan, but who alleges that Avanti is “desperate” and “hiding the awful truth” about its trading numbers and states that the London-based business will be “trading whilst insolvent within weeks”.
He states that he has written to the UK’s Financial Reporting Council (FRC), which is the UK’s independent regulator responsible for corporate good governance, and asking that the FRC investigate Avanti over its 2015 accounts, and in particular a $25.1 million ‘sales’ transaction, which Winnifrith says was a near ‘swap’ with SES, and that the only money which changed hands was from Avanti TO SES.