Shares in Avanti Communications Group PLC (LON:AVN) got a boost today from news that it has launched a proposed US$242mln refinancing after the satellite operator abandoned plans to sell the company.
The group said that a key strategic review of the business, which began in July, has led it to terminate the formal sale process it had announced in September.
Instead, Avanti has launched a proposed refinancing, which it says will fully fund the company through the creation of US$242mln in additional liquidity.
READ: Avanti buyer talks continue ...
The AIM-listed group said US$130mln will come from new cash funding in the form of PIK (pay-in-kind) toggle notes, a type of bond where interest payments can be deferred, and US$112mln from potential interest deferrals up to April 2018.
Avanti said this will allow it significant working capital to launch its HYLAS 4 satellite and grow its capital structure.
Back in September, Avanti said it was still in discussions with potential buyers after its larger rival Inmarsat PLC (LON:ISAT) ruled out a bid for the company.
Inmarsat said in July that it had no interest in Avanti having been contacted by its advisers and had “withdrawn from Avanti’s announced process and it is not considering an offer for the shares.”
Liquidity needs ...
Avanti had warned in July that it would need to raise at least US$50mln after slashing its recurring revenue growth target.
In September it announced a two-phase funding strategy in order to address a “short term liquidity need”.
In reaction to today’s refinancing news, Avanti shares soared over 15% higher, up 3.25p to 24.25p.
According to Avanti, it has received the agreement of bondholders representing 73% of its senior secured notes due in 2019 to fully underwrite the new cash funding and to consent to certain amendments and waivers to permit the interest deferral.
Avanti chairman Paul Walsh said: “Securing the underwriting of core bond investors to launch this major refinancing gives us a high degree of confidence that it will complete in January.
“After a turbulent year for Avanti, it is important for us to focus all of our attention on delivering outstanding services to our customers and preparing for the launch of HYLAS 4,"
He added: "This prized asset will more than double the revenue generating capacity of the fleet, bringing much needed extra capacity to mature markets in Western Europe and opening exciting new markets in West Africa."