Struggling satellite operator cuts debt with investment lifeline Business

Embattled satellite operator Avanti Communications has earned a lifeline from investors who are reducing its debt by more than half a billion dollars.

The broadband provider said it had “significantly strengthened” its financial position with a deal that made hedge funds Solus Alternative Asset Management and HPS Investment Partners its largest shareholders.

Avanti had been forced to extend the debt repayment deadline from late January to February 28 as it struggled to ease financial pressure on the company.

The debt-for-equity swap approved by its six backers will reduce its debts from $809m to $264m (£203m) and reduce its interest payments.

The move comes as Avanti faces increasing competition in the satellite business from Elon Musk and Amazon founder Jeff Bezos, two of the richest people in the world.

Kyle Whitehill, chief executive, said the deal will give Avanti more cash to support investments.

“When Avanti was founded almost 20 years ago, the first steps were to raise capital to launch satellites, because the telecommunications market requires a lot of upfront capital investment,” he said. .

“What I inherited four years ago was about $850 million in debt and realistically no prospect…that the company would be worth more than $850 million at some point.

“Every time you talk to a client or a partner they say ‘wow, you have a lot of debt’, so that’s a much more positive story than what we have now.”

Avanti has spent millions on satellite launches to create a network where mobile and broadband companies can provide coverage to the most remote areas.

However, the high cost of these projects and his battle for higher returns made it difficult to repay the debt.

The latest deal means shareholders Solus, BlackRock, Great Elm Capital Corporation, Robus and MSD will now own the company’s debt and equity. HPS becomes a new investor in Avanti as part of the deal.

This is the latest in a series of deals Avanti has made to secure its future. In 2017, bondholders and investors backed a refinancing that provided $242 million in liquidity through a cash injection and deferred interest payments.

A year later, he set up a debt-for-equity swap that halved his borrowings at the time to $450 million and reduced his annual interest bill by tens of millions of pounds.

Avanti added: “This significantly strengthens Avanti’s financial position going forward as we continue to grow the business and meet customer needs.

“This means business is business as usual at Avanti, but with a stronger balance sheet. We look forward to this next phase in Avanti’s growth journey.”

Avanti’s recapitalization comes as SpaceX and Mr. Musk’s Kuiper, owned by Mr. Bezos, launch internet-enabled satellites in a bid to corner the booming telecommunications market.

OneWeb, Britain’s taxpayer-backed broadband operator, is also pursuing its own satellite projects, while the EU announced plans to invest €6 billion in the sector earlier this year.

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This notice was published: 2022-04-13 12:00:00

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