Adrian Hargrave, CEO of SEEEN, explains how the new funds will accelerate customer growth Watch the video here.
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We'll just have to see, but I do note that AVN's "must hit" revenue increase forecasts would only take them up to around $90m of sales in 2019 and then $117m of sales in 2020, so still a million miles away from the 7x (or 5x) revenue lkevels needed to cover costs + interest.
Having said that, those seem to be the absolute minimum levels necessary to stop the bondholders kicking off terminally.
Kernowken, to be fair, given the mammoth issue of new shares in last year's D4E swap - which as you rightly say gave the company in almost its entirety to the bondholders and diluted existing PIs by an eye-watering factor of 13 or so - , an SP of £2.95 back in the day would today roughly equal an SP today of around 22p. However, I don't expect to see anything remotely approaching that either.
That wont be me arguing with HITS. Like many I assume the bondholders dont want to pull the plug as they have hopes/knowledge of better times ahead and with the d4e swap they now effectively own the company with us pi's as very minor players.
Newquay is in play with Virgin to launch satellites and Avanti is in Cornwall so that might be a minor factor also. It could have been so different if the previous BOD had not taken the road they did. I remember the £2.95 a share days but don't expect to see anything like that again.
GLA
Romaron - you make some good points. Regarding the debt - S&P downgraded it to 'D' back in 2017 which is technical default. At the time, they believed that the bondholders would recover between 35% to 65% of monies owed to them in the case of actual liquidation, so nothing for shareholders. However, cash burn has continued since this time and hence it's not clear that the current picture would be so 'rosy'.
Lots of valid points there HITS, The American bondholders clearly think AVN has a fighting chance by continuing to support the company, It could well be the tie up with comsat to gain access to the American military market could well be key to the company meeting its targets in order to survive, who knows AVN might blow their own targets out of the water with a large capacity deal on either of their satellites, I'm sure you would be the first to congractulate the BOD if this did occure, after all AVN use American tech on American built satellites and are owned by Americans, I'm sure Trump would love that.
Difficult to argue with all of theat HITs. However, I'll bet that someone:
- tries
- moans at you to cheer up
- calls you a paid deramper
- accuses you of being me (and vice versa)
- threatens to filter you (but doesn't really)
:-))
I can't understand it either HIS but the equity here is very similar to the remaining debt in value (fag packet calcs. only allowed). Talking of a debt of $500mio is a paper debt. How many cents in the dollar could you trade this debt for? It must have some value but I imagine the market for used satellites is quite specialised. So if H4 has any value that will be close to the debt. The equity exists only by the gift of the debt holders as their earlier debt is now equity. Another question might be as to why they keep the shares on life support. it could be that they are a useful vehicle for holding tax losses or some other arcane reason but I'm not an international tax lawyer. There is an AGM on the 24th but don't expect to learn anything although an RNS around the 24th might be released as the board will be together.
PS to be scrupulously fair, if AVN reduces its cost of sale by its targeted 15% (and thus puts its GM up from 35% to 50%), it'd then only need a 5 times increase in current revenues to cover current debt financing costs.
...what there is to dispute here?
It's all in black and white and the facts are simple to anyone capable of the faintest objectivity.
The company under the previous DW regime spent years talking up the share price, taking on nigh on a billion dollars of debt and chasing entirely the wrong rabbit (consumer connectivity in W Europe).
The company has now (thank God) roughly halved its debt mountain, has a new regime in headed up by KW and is now focussed on chasing far more appropriate business.
The sole question is - can AVN quickly get to revenue levels that will allow it to stop bleeding tens of millions of dollars per annum in servicing the costs of the remaining c. $500m debt?
The answer so far is a big fat no. Revenue levels are currently around $53m per annum, costs are currently around $80m, giving the reported negative c. $27m EBITDA.
On top of that, there's debt servicing costs of c. $75m per annum.
So, ignoring extraordinary one-offs, AVN is currently bleeding around $100m per annum from a cash point of view. That's what they have themselves reported and that's why they've put those 5 caveats re "going concern", namely:-
They need to achieve the stated increases in revenues (+67% in 2019 and a further +30% in 2020)
They need to achieve the cost reductions of 15% by end 2020
They need to get agreement to postponing the $30m embarkation fee on H3 - or borrow more to cover this if not agreed.
They need to refinance the entirety of the c. $150m Super Senior Notes before maturation at end 2020.
They need to draw down on a further c $45m from their new 1.5 facility (they've already had c. $10m since year-end).
All that's in the Final Results RNS and if they miss any of the above, they're in severe trouble with the bondholders - hence the caveat.
The real point over and above this remains - can AVN get to the revenue levels that allow them to cover off interest payments?
Back of a fag packet time - and this seriously isn't rocket science (no pun intended).
AVN's gross margin seems to be running at between 30-37%, so let's call that 35%. Staff and other costs seem to be running at around $45m per annum and interest costs are c. $75m (prior to costs associated with the 1.5 facility drawdown, but let's ignore that).
Therefore just to to cover cost of sale, staff and other costs and already incurred financing costs, AVN needs to produce a GM of around $120m per annum, which at current margin levels would mean a sevenfold increase in revenue levels is required. If it doesn't, it'll continue to bleed cash to one extent or another.
AIMO, but I'll be interested to hear where the above quick calcs are majorly off...
And yes, I know I've ignored the one-off $30m due presumably to Arianespace before H4 launches and I also know I've assumed no increase in staff costs necessary to achieve increased revenue levels etc etc.
Every time I challenge you to justify a post, I get some banal response, which is you effectively dodging the question or issue. I at least have a view which I am willing to justify. You add nothing here from what I can see, but I live in hope, so please respond accordingly, if you are able.
I think MTB its in the bin you go, enjoy spreading the doom.
What an odd post - perhaps you might elaborate. I was certainly amused by your confusion - that makes me unpleasant, does it? Get over yourself.
Oh the Irony MTB, either that was a strange attempt to make yourself look good or you really are a bit thick. I think Buko summed you up quite well earlier, I would add unpleasant individual to his post.
Tyche - your post at 11.48 is your best yet!! You have clearly confused MENSA with MENCAP! Mensa don't deal with mental health you daft boy.
Still can't stop laughing - it's a wonder I can type...:-))
Tyche, why don't you read the RNS more carefully.
All the new efforts are (quite rightly) non-Europe focussed, with the possible exception of redeploying some H2B beams (but from Europe to Europe, so hardly incremental). There's a reason for H4 and H3's footprints, you know?
No specific mention of extra EE requirements either - despite your frequent protestations that these were bound to occur....
Sorry Buko, not my intention to upset you, but you stated than Vodafone had a 'Going Concern' statement, and I simply pointed out that this was not factually correct.
Secondly, this was not an RNS, but regardless, my point is that without some form of revenue guidance or estimate, this news provides nothing of significance.
Not sure what you mean by 'biased'. If you don't have a bias one way or another how on earth can you be a successful investor? My bias on this stock is neagtive, but simply for financial reasons which I have outlined many times below. I am at a loss to know when I've actually been rude to you?
“Risks and uncertainties “ Each company words differently If there is a concern it has to be in the financials every company has a concern over the future. Obviously avn have a ongoing material uncertainty but you stated your unbiased So what does “couldn’t be any clearer “ Means nothing AVN are stating the possible position of the company just like the D4 situation. Yet again for some reason you seem to think that the MGI Rns should have revenue attached when it’s a ongoing five year agreement it’s a new distributor.. Your coming across has a very rude and somewhat argumentative individual with no interest in this share who’s very biased..
I can confirm I am not DW, I wish I had his money though, But thankfully for me I'm much younger. I do feel the team at mensa would frown upon you mental health jibes, It's a very serious issue for some.
Here's a thought - could old Tychey be DW - still on here desperate to try and get his worthless options back 'in the money'. No more ridiculous than suggesting that me, SS and HITs are all the same person - LOL.
(I have mused previously that GCC could be DW, but surely even a company as desperate as Avanti would steer clear of employing people living in a mental health instituion........wouldn't they? ;-))
Its like a double act! Well all I can say is HITS you must have quoted hundreds of times about western Europe not needing AVN's services yet I did laugh when I read about a capicity shortage here in the UK, seems your contacts got it all wrong yet again. Cheer up man.
Not worth an RNS, presumably because there's no income guarantee.
However, at least another sensible deal from a geographic/application point of view, which reaffirms the far more appropriate direction taken by the new BoD. It's up for grabs whether this will turn out to be all too little and all too late.
AVN would almost certainly be in a very different place today if it hadn't been for the previous regime. DW has one hell of a lot to answer for...
...not that he'll personally care, given the obscene amounts of moolah he trousered whilst blithely steering AVN in the entirely wrong direction and in the process lumbering it with all that debt.
I don't see a revenue number tychey? What's the significance of this news? What's your analytical take on this? Come on, we're all desperate to know....? ;-))
https://www.avantiplc.com/news/avanti-signs-master-distributor-agreement-with-mgi-for-hylas-4-across-south-sudan-chad-and-angola/
http://www.mgi-management.com/about-us/
London, 11 June 2019
Avanti Communications Group plc has signed an agreement with mgi global services Limited, an international voice and data service provider, making mgi one of Avanti’s exclusive master distributors for HYLAS 4 services and capacity. The five year agreement enables mgi to provide high-speed satellite broadband services across South Sudan, Chad and Angola. The partnership will improve the penetration of reliable satellite broadband in these countries, and significantly increase access to the internet.
Through Avanti’s latest state-of-the-art Ka-band satellite, HYLAS 4, mgi will provide affordable high-speed satellite broadband to connect governments, enterprises, schools, clinics and communities in South Sudan, Chad and Angola, especially in rural and other locations where terrestrial networks are limited or unreliable.
Avanti CEO, Kyle Whitehill, said “HYLAS 4, the latest addition to our satellite fleet, was launched to complete our coverage of Sub-Saharan Africa. We are delighted to be working with the mgi team as a preferred partner to drive the realisation of our mission to deliver broadband access to help liberate the potential of communities and businesses wherever they are located.”
mgi Managing Partner, Ilija Reymond, added “We are committed to providing governments, NGOs, businesses and communities across Sub-Saharan Africa with reliable and top tier telecommunications services. Avanti’s HYLAS 4 enables us to provide customers with affordable high speed and quality broadband flexible Ka-band satellite technology. Our first live site with HYLAS 4 has been a real success. We’re excited to partner with Avanti to further expand our service portfolio and to continue supporting the digital transformation in Africa.”
https://www.frc.org.uk/getattachment/62ae3969-fe26-4def-8d25-e2acd821e7b1/Guidance-on-the-Going-Concern-REVISED-WEB-READY-2016.pdf
Buko - table on page 10 makes this clear. Going Concern disclosure only required where material uncertainty exists.
* no 'Going Concern' statement included.