Avanti restructuring begins

As outlined here last week, troubled London speciality satellite operator Avanti Communications has started its potential restructuring. Avanti is proposing a ‘Debt for (new) Equity’ swap, and would issue 2 billion new 1p shares to debt-holders.

January 19th saw a Consent Solicitation issued by Avanti. This process will result in one of the following outcomes:

1. Receipt of consents from note holders equating to at least 90 per cent of the 2021 Notes by number and value. This will result in the terms of the restructuring being approved and applied to 100 per cent of the 2021 Notes. The Initial Consenting Investors are contractually committed to providing their consents and equate to 62 per cent of the Existing Notes.

2. Receipt of consents will be received amounting to less than 90 per cent  of the Existing Noteholders. In this scenario, an English law scheme of arrangement would commence, seeking approval via an alternative mechanism for the amendment to the economic terms of the PIK Toggle Notes. The Scheme of Arrangement would run for approximately 6-8 weeks and would result in one of the two following outcomes:

3. Receipt of consents from note holders equating to at least 75 per cent of the Existing Notes by number and value. This will result in the terms of the restructuring being approved and applied to 100 per cent of the Amended Existing Notes. The Initial Consenting Investors are contractually committed to providing their consents and equate to 62 per cent of the Existing Notes.

4. Consents will be received amounting to less than 75 per cent of the Existing Noteholders. This is considered unlikely given that the Initial Consenting Investors are contractually committed to providing their consents and equate to 62 per cent of the Existing Notes. In this scenario, the restructuring would fail and the Group would need to successfully complete an alternative restructuring or raise new money in order to have sufficient resources to continue in operational existence for the foreseeable future.

In addition to the consents required from the holders of the Amended Existing Notes to have their notes converted into ordinary share capital, the holders of the Company’s ordinary share capital pre-reorganisation also need to approve three shareholder resolutions in order for the debt for equity swap tobe successfully completed:
1. An ordinary resolution to approve the issue of approximately 2 billion new ordinary shares of 1p each in the Company. This resolution requires greater than 50 per cent of votes cast to be passed.
2. A special resolution to disapply pre-emption rights with respect to the issue of these shares. This resolution requires greater than 75 per cent of votes cast to be passed.

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