As to cost cutting measures Avanti have around 197 staff - and that is quiite high for a company with only two satellites operation. They have taken on some staff and infrastructure to perform their own operations at Goonhilly (prreviously theoir operations were outsourced to Inmarsat) - so this is one area which could be cut or outsourced again. I do not thnk they could raise extra debt becuase of the terms of the bond - so their only option is to raise through equity sales and as the share price tanked it became obvous that this would lead to losing control of the company anyway - therefore the RNS declaration for a sale.
I have 25 years of investing in tis sector - not just a day trader like you trying to ramp stocks to cover his positions. Anyone who wants to seriously invest in this sectr has to know about the business, for example, one of the 'assets" for Avanti is the Artemis satellite whch they got from the European Space Agency for free - in May this satellite was positioned over europe, now it is somewhere over the middle east and moving - wnat to guess why? get yourself some real knowledge
One point that folks have possibly missed here is that the reported cash balance of c.$58m was at year end (ie June 30th): my understanding is that this would have been before the c. $30m semi-annual coupon payout on the bonds (the first payment was in a January - implying the H2 payment would be in a July. Please let me know if this is incorrect).
Given the typical $10m monthly burn from operations, it is surely a possibility that the cash position is becoming acute?
The timing factor here then really is critical, as a cash tightness like the above would suggest they have run out of time for the mooted equity issuance and we are now going over two weeks into any sales process. Any suggestion that it is a race against time will considerably hamper the negotiating stance; and even if there were several competing buyers, competitive tension would rely on more than one of these being prepared to move very rapidly and presumably with only minimal diligence. The odds are against this in my view but you never know.
Another point that has also not really been picked up is that from the original provisional results RNS, it was noted that AS WELL as both an equity issuance and raising some export finance loans, the company would complete a cost cutting exercise. This seemed a curious item in the announcement given the business will need to be positioned for growth to make the most of the HYLAS 4 launch. Also, Avanti should be a fairly lean operation given much of the operating base is technical and the capex largely outsourced.
Given this: what is the statement doing in the RNS, a medium where we know every word is chosen carefully?!
My instinct here is that as trading fell cumulatively so far below plan, the Directors would have identified a funding gap of - judging by the RNS - around $160m (through to launch and thereafter, break even). Presumably two thirds of this gap was to be bridged by equity and the rest from new loans.
However, with the share price depressed and possibly high level investor soundings proving tough, management would have seen that they could not raise more than $50m. Given the funding gap identified, they would not have been able to confidently sign-off on any new debt or equity fundraising as a going concern; nor even continue trading if we follow the same logic.
However, by the simple act of Directors signing-off on a cost saving plan that bridges this gap - voila: the problem goes away and they can release the RNS and try and raise some money.
Who knows what the case really is here: clearly however cash liquidity is getting tight and management must have been hoping they could have got away a bigger equity raise than the one finally announced.
As someone who has a history in the space business I can tell you that being in these "second tier" operators is not the place to be right now. there are other companies - such as Thaicom or ABS - in the market for buyers right now and they are n a lot stronger position than Avanti. The "big boys" SES, Inmarsat, Eutelsat and Intelsat would be interested in Avanti in-space assets, as would some emerging countries wanting to get a quick jump start on a national comms sat, but the level of debt is fairly prohibitive as the assets are secured - easier to let them go bust and pick up the assets in a fire sale. The big players have large governmental backhaul contracts to lean on, but if you look at Avanti's recent contracts they are piecemeal - denoting some desperation. In the near future there are some large systems coming on stream - VIASAT terabyte throughput satellites and mega-constellations in the same frequencies - so to be taking a bet on a 15 year timeline for a new satellite at this particular time is a large gamble.
You see this is what makes me puke ! Unlike us suckers (Shareholders), Williams and his cohorts have been exposed to no personal financial risk whatsoever. Still taking a big fat fail-or-succeed salary and huge share options.
That goes for nearly every AIM. Not a place for genuine investors.
Having said all that I do think BT will swoop soon at this price.
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