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Last-minute rescue for Avanti as lenders extend deadline and inject $30m

Kyle Whitehill Avanti.jpg

Troubled UK satellite company Avanti Communications has won itself a year’s grace from its lenders by negotiating a last-minute extension.

Its existing junior lenders have injected US$30 million of new capital, and its so-called super senior facility, which was due for repayment last week, has been extended — but only to the end of January 2022.

CEO Kyle Whitehill (pictured) said: “The material maturity extension and additional capital injection represent a strong vote of support from our existing investors in the business, its prospects and the management team.”

Avanti said that its position has changed because it has “secured three major contracts with [mobile operators] and tower companies towards the end of 2020, collaborating with them to provide cellular backhaul across Africa using our Hylas 4 satellite.”

It also provides backhaul to BT’s EE mobile division for its UK government emergency services.

However, Avanti, which operates geostationary satellites orbiting at 35,786km above the Earth, is going to be increasingly challenged for such markets with the growth of low Earth orbit (LEO) satellites such as Starlink and OneWeb, with orbits in the 1,000-1,500km range.

Starlink, owned by Elon Musk’s SpaceX, is already running pilot commercial services from its 1,000 satellites in service — a number being boosted 60 at a time by new SpaceX launches.

And OneWeb, rescued last year by Airtel of India and the UK government, is planning to start commercial services in October 2021.

Both of these networks — with others yet to come — will compete with Avanti by offering a low-latency backhaul and home broadband service that will not have the long delays inherent with geostationary satellites. Competition will be reaching its peak in early 2022 when Avanti has to pay back its loans on the extended terms negotiated in the past few days. 

Whitehill, CEO of Liquid Telecom South Africa until three years ago, said: “We have a strong pipeline of opportunities for 2021 and beyond, including growing revenues from defence partnerships and from our fast growing carrier business, putting us in a position to continue to drive revenue and further accelerate our growth in the future.”

But Avanti has been here before. In 2016 it put itself up for sale, but in December that year managed to negotiate refinancing of $242 million, enough to launch its Hylas 4 satellite in 2018, at least a year behind schedule.

Companies House, the UK government’s companies registration service, has warned Avanti that it is late in filing its accounts. The last full-year accounts it has were for the year ending 31 December 2018, and it has not yet received its accounts for the following year, which were due at the end of 2020.

However, Avanti yesterday issued what it called its “quarter 3 trading update” — though that quarter in question was for the three months ended 30 September 2019, not the third quarter of last year. Revenue in the third quarter of 2019 was $17.1 million, including bandwidth revenue of $15.2m.

The company said: “Trading remains on target against internal plans. Progress continues with the cost optimisation project and the company is well placed to achieve the previously announced full year savings which should result in positive EBITDA for the full year.” That, presumably, still refers to a trading year that ended 13 months ago, though this was not clear.

Avanti said yesterday that, now it again has enough money to survive, it will “continue to execute on its growth plan”, with a focus on three sectors: government, including defence; carriers, providing cellular backhaul; and industry, wholesaling services to satellite operators and integrators.

At the same time Avanti said it had accredited a new range of portable satellite terminals — which it calls “man-portable” — made by Paradigm. It said these are “well-suited to early-entry or first responder missions”.

 

 

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