Troubled satellite operator Avanti Communications has restructured a considerable portion of its debt, converted the bulk into equity and at the same time extending its borrowings.
The new refinancing is a classic ‘debt for equity’ deal, Working capital improves but at a much lower rate of interest (from 10 per cent to 7.5 per cent). London-based Avanti will also convert much of its massive and expensive debt into equity.
Avanti says it has agreed with its bond (debt)-holders representing 62 per cent of its 2021-due borrowings, and 55 percent of its 2023-due amounts, as well as larger shareholders with 34 per cent of the existing share capital, to restructure certain debt, worth a total of some $557 million. The restructuring will save the company considerable interest payments.
All of Avanti’s 2023-due note-holders will get about 2 billion new 1p shares, which will represent 92.5 per cent of the company’s ordinary share capital once the agreement takes place.
Chairman Paul Walsh said the move was a “positive step”, which would lower its cost of capital and give it “additional headroom in a crucial period” ahead of the launch of two satellites, in particular its much-delayed Hylas-4 craft.
Mast Capital Management, Solus Alternative Asset Mgt. and Tennenbaum Capital Partners, all of which are represented on Avanti’s board of directors, will see their bonds/debt converted into equity. Solus will be the company’s largest shareholder with 41.5 percent of the issued shares. Avanti is seeking an exemption from the City Takeover Panel to allow Solus to hold such a stake without the obligation to bid for the balance of the shares issues.
Once the debt-for-equity transfer takes place, other existing shareholders will hold just 7.5 per cent of Avanti’s shares.
Avanti did not release any trading update. Shares moved upwards 1.45p from about 6.5p (22.35 per cent).