Bondholders back Avanti restructuring
January 10, 2017
It seems that London-based speciality satellite operator Avanti Communications has won a vote of approval from its bondholders to its financial restructuring plan. Some 91.85 per cent of bondholders have approved the scheme.
Avanti, which is listed on the London Alternative Investment Market (AIM) said the consent solicitation was to permit, among other things, the incurrence of up to $132.5 million in super senior indebtedness and the payment of PIK (‘payment in kind) Interest on the notes in lieu of cash for certain future interest payments due.
“As a result, revocation rights in connection with the consent solicitation have been terminated,” the board said in a statement. “The amendments will become operative upon the payment of the consent payment and the satisfaction or waiver of the other conditions set forth in the consent solicitation statement, exchange offer and new money offer memorandum.” Avanti said it expects to make a consent payment on or around 26 January of $2.50 per $1,000 principal amount of notes, to be paid in the form of cash, to holders who validly delivered a consent prior to 2359 ET on 4 January.
“The company welcomes the support of investors in funding the business with this $242 million financing package and looks forward to the forthcoming launch of HYLAS 4 this year which will mark a major step forward for the business,” said chief executive David Williams.
The risk now for Avanti is how well they will trade throughout 2017. Pessimists suggest that trading revenues will be hard pressed to earn enough to meet interest payments. Avanti says its position is very much as a “going concern”, and thus setting aside any immediate anxieties of liquidation. One key deferment is the payment of $39 million of outstanding capital expenditure to Orbital Sciences for its upcoming Hylas-4 satellite. The payment is deferred until Q4 of (calendar year) 2017.
Avanti says that it expects fleet utilisation on Hylas-4 to be 25-30 per cent by the end of its 2019 FY. Delivery and launch of Hylas-4 has slipped by a quarter-year to April/May 2017 which doesn’t help with incoming cashflow. Its net debt at June 30th 2016 jumped from (2014’s) $406.2 milion to $588.9 million, with cash in hand having tumbled from $122.2 milliob in June 2014 to just $56.4 million, and no doubt further depleted by the end of 2016. Its September 30th cash in hand position had dwindled to $43.1 million.
As previously reported by Advanced Television, Avanti’s claimed contracted backlog stood at $290.4 million as at June 30th. By September 30th 2016 this had shrunk to $276 million. A year previous (ie: its June 2015 position) its backlog stood at $389.5 million, while its 2014 position saw a claimed backlog of $430 million.