Bigblu Broadb. Regulatory News (BBB)

Satellite Solutions Worldwide Group plc

("SSW" or the "Company")

Avonline Broadband Acquisition & £12m BGF Funding

Acquisition of Avonline Broadband, the leading UK satellite broadband operator

£12m funding from Business Growth Fund plc

Notice of General Meeting

Satellite Solutions Worldwide Group plc (AIM: SAT), the global communications company specialising in rural and last-mile satellite broadband, announces the conditional earnings enhancing acquisition of Avonline Satellite Services Holdings Limited ("Avonline Broadband" or "ASSH"), the leading UK satellite broadband provider for an initial consideration of £10m (the "Acquisition"), to be satisfied through existing cash resources and a new financing agreement with Business Growth Fund plc ("BGF") (the "Subscription").

Highlights

· Transformational acquisition of Avonline Broadband increases SSW's UK and global customer base to c.17,000 and c.35,000, respectively

· Post-Acquisition, SSW will be the UK's leading satellite broadband provider

· Revenue per Avonline Broadband user is comparable with SSW's UK users with gross margins c.33% higher

· Anticipated turnover from Avonline Broadband of at least £5m in the first full year of ownership

· Under the terms of the Acquisition, the first full year contribution to earnings before interest and tax from Avonline Broadband is anticipated to be c.£2.5m

· £12m investment from BGF in the form of:

o a £9.6m unsecured loan note

o a further £2.4million unsecured convertible loan note converting at 9p a share

o BGF also granted an option to acquire 74,019,915 new Ordinary Shares at 7.5p per share

o Capital repayments commence in May 2021

· Proceeds of BGF investment used to:

o Acquire Avonline Broadband in full

o Repay in full the £2m April 2016 unsecured Existing Loan Note

· Acquisition will provide economies of scale within operations, marketing, logistics and sales

· The Government's BDUK voucher scheme will help to underpin organic growth post completion of the Acquisition

· Current trading in line with management's expectations and Company remains on target to achieve 100,000 users by the end of the financial year 2017

Satellite Solution Worldwide Group plc CEO Andrew Walwyn commented:

"Combining Avonline Broadband with our existing business gives us a tremendous position of strength within the burgeoning UK satellite broadband market. The acquisition generates a number of economies of scale and operational benefits which we already have plans to implement following completion. We anticipate this new base will allow us to benefit considerably from the accelerated future roll out of the BDUK voucher scheme. 

"On completion of the Acquisition, we will have c.35,000 users across Europe, and this propels us towards our stated target of 100,000 customers by the end of 2017. All acquisitions to date have been successfully integrated and are performing well, with the Company enjoying organic growth.

"I am delighted we have received further support from BGF. The acquisition of Avonline Broadband is our largest to date and shows just how far we have come since joining the market in May last year and we intend to continue with our stated buy-and-build strategy going forward to deliver significant shareholder value over the near-term. The BGF investment will allow us to significantly strengthen our position in the UK and I am proud to have the support of an institution such as BGF as we continue to grow."

Sarah Ledwidge, Business Growth Fund, commented:

"BGF has been working with Andrew and his team for a number of months, having provided a small amount of funding earlier in the year. We have been extremely impressed by the business and team he has built in response to an exciting market opportunity. We believe in management's vision for the Company and their ability to deliver it. This was a great opportunity to provide a meaningful, long-term investment and to help accelerate SSW's growth in the months and years ahead.

"This is BGF's fourth significant investment since the Referendum vote, demonstrating that there are business owners and management teams that are forging ahead with their plans. That is a positive sign. No one knows the outcome of the next few weeks, but now is not the time for businesses to start putting the brakes on. Now is the time to keep investing, keep partnering and keep innovating - and that is something we are wholeheartedly committed to doing."

Enquiries:

About SSW

Established in 2008, SSW offers a broad range of satellite broadband services with customers across 31 countries. With solutions targeting B2C and B2B users, and with products developed specifically for the broadcasting/SNG, Police and Military markets, SSW's brand Europasat (www.europasat.com) is a leading independent provider of satellite broadband internet services across Europe.

Listing on the London Stock Exchange as Satellite Solutions Worldwide Group plc (AIM:SAT) on 12 May 2015, and with a track record of strong organic growth in its subscriber base and recurring revenues, the directors of SSW believe there is a major opportunity to consolidate the businesses organic growth with acquisitions throughout the fragmented European satellite broadband market.

Working closely with satellite owners and operators, SSW targets customers in the 'digital divide' with solutions that deliver up to 30 Mb satellite based broadband services to almost any premises, whether residential, commercial or industrial across Europe, irrespective of location or local infrastructure.

About BGF

BGF (Business Growth Fund) is the UK's most active provider of growth capital to small and mid-sized businesses. The companies it backs are privately-owned or listed on AIM, and typically have revenues of between £5m and £100m. BGF makes initial investments of between £2m-£10m and can provide additional funding to support further growth. The investment provided is typically in the form of equity in return for a minority equity stake.

BGF is an independent company with capital of up to £2.5 billion and is backed by five of the UK's main banking groups - Barclays, HSBC, Lloyds, RBS and Standard Chartered.

www.bgf.co.uk

Twitter: @bgf_team

LETTER FROM THE CHAIRMAN

Dear Shareholder,

Acquisition, Subscription, and Notice of General Meeting

1. Introduction

Today, the Company announced that it has agreed conditionally to acquire the entire issued share capital of ASSH for a base consideration of up to £10.0 million payable in cash, of which £9.5 million is payable on completion and a further £500,000 one year after Completion (or earlier, subject to meeting certain financial targets). A further incentive payment is payable subject to the financial performance of the acquired business post completion being above an agreed hurdle rate.

ASSH operates, through its subsidiary ASSL, one of the leading satellite broadband businesses in the UK known as Avonline Broadband, with a customer base of approximately 9,500 customers. The acquisition of ASSH is a transformational event for SSW and increases SSW's UK and global customer base to approximately 17,000 and 35,000, respectively.

The Company will finance the consideration through existing resources and a new £10.0 million financing arrangement with BGF, which provided the £2.0 million Existing Loan Notes in April 2016. The Company has entered in to a conditional funding agreement with BGF, pursuant to which BGF will provide a total investment of £12.0 million by way of a subscription for new loan notes (a net new investment of £10.0 million, after redeeming the £2.0 million Existing Loan Notes), comprising £9.6 million unsecured loan notes and £2.4 million unsecured convertible loan notes (convertible at 9p per share). BGF will also be granted an option to acquire 74,019,915 new Ordinary Shares at 7.5p per share.

The arrangements with BGF would, on conversion of the Convertible Notes or exercise of the Option, exceed the existing authorities which the Directors have to allot new Ordinary Shares for cash without pre-emption. Accordingly, the purpose of the Circular is to provide Shareholders with information regarding the Acquisition and the Subscription and to give notice of a general meeting at which shareholders will be asked to approve, inter alia, resolutions granting such new authorities, amongst other additional authorities, to enable the Directors to complete the Subscription and hence the Acquisition.

The terms of the acquisition of ASSH are governed by the Acquisition Agreement. The terms of the subscription with BGF are governed by the Subscription Agreement. Completion of the Acquisition Agreement and the Subscription Agreement are inter-conditional and subject to Shareholder approval of the Resolutions described below.

Accordingly, the Company is seeking the approval by Shareholders of the Resolutions which are to be put to the General Meeting of the Company to be held at the offices of Fladgate LLP at 16 Great Queen Street, London, WC2B 5DG at 10.00 a.m. on 25 July 2016. If Shareholder approval of Resolutions 1, 2 and 3 is not given at the General Meeting, neither the Subscription nor the Acquisition as currently envisaged will proceed. The Notice of General Meeting is set out at the end of the Circular and a Form of Proxy is also enclosed for you to complete. The Circular includes an explanation of the Resolutions.

2. Avonline Broadband and the Acquisition

ASSH, through its subsidiary ASSL, operates a satellite broadband business primarily in the UK, with a total customer base of approximately 9,500, of which approximately 92% are consumers and approximately 92% are in the UK. The acquisition of ASSH's customer base is a transformational event for SSW and increases SSW's UK and global customer base to circa 17,000 and 35,000, respectively.

ASSH was incorporated on 12 May 2016 and ASSL on 26 May 2016 as part of a restructuring of Avonline plc. The satellite broadband business and related inventory of Avonline plc was transferred to ASSL, a subsidiary of ASSH, which was demerged from Avonline plc. This restructuring is a significant benefit to the Company, enabling it to acquire an operating business, with an eight-year track record, whilst limiting the possibilities of unidentified historical liabilities.

In the year ended 31 December 2015, Avonline plc's satellite broadband business generated revenues of approximately £5.0 million. As the ASSL business was previously a division of a larger entity, it is not possible to generate directly comparable data on costs or margins and therefore profitability. The Company has, however, been able to complete detailed due diligence into ASSH and ASSL and believes that average revenue per user is comparable with that generated by SSW's existing business in the UK, although its gross margins are around a third higher.

Acquisition Rationale

The Company believes that the earnings enhancing acquisition of ASSH has tremendous strategic value for SSW, is low-risk and can be readily integrated into the SSW group. The size and scale of the combined business means SSW will be the UK's leading satellite broadband provider. The acquisition will provide economies of scale within operations, marketing, logistics and sales.

ASSH will be the eighth acquisition by the Company since it joined AIM in May 2015 and will significantly enhance its recurring revenue base. The Company remains focused on organic and acquisitive growth and the Acquisition further enhances its ability to service broadband "white spots". The Government's "BDUK" voucher scheme will help to underpin growth and post completion of the Acquisition, the Company will have 17,000 customers in the UK giving it an ideal base to target an estimated 300,000 properties across the UK that could benefit from the Government's decision to subsidise satellite broadband.

The Acquisition Agreement

The Company, through its subsidiary SSWL, has agreed to purchase the entire issued share capital of ASSH from the Sellers.

The purchase price for ASSH is £9.5 million payable in cash on completion plus a further £0.5 million deferred consideration payable when annualized monthly GBM within the six months following Completion reaches the equivalent of £2.5 million or in any event no later than twelve months following completion of the Acquisition, subject to clawback if GBM for the full year following Completion is lower than £2.5 million. The Company is a party to the Acquisition Agreement as the guarantor of SSWL's payment obligations.

In addition, the Company has agreed to make an incentive payment based on the financial performance of the Avonline Broadband Group business during the 12 months following Completion of a multiple of five times the excess GBM for that period over £2.5 million, subject to an overall maximum such that the total payable in connection with the Acquisition cannot reach or exceed the Company's market capitalisation as at the close of business on 6 July 2016 (being the latest practicable date prior to the posting of this document). In practice, the Company and the Sellers expect this additional payment to be no more than £2.0 million (taking the total payable to £12.0 million), which represents GBM for the Avonline Broadband Group business for the 12 months following completion of £2.9 million (which would compare very favourably, given the growth trajectory, with the £1.9 million achieved in the year ended 31 December 2015). This additional payment has been designed to encourage sustainable growth in both the customer base and GBM.

Completion of the Acquisition Agreement is conditional upon completion of the Subscription, the receipt of consents to change of control from the Avonline Broadband Group's wholesale satellite service providers, there being no material breach of warranty or material adverse change affecting the Avonline Broadband Group and its business, and the market capitalisation of the Company not falling below the level of the base consideration. The base consideration is also subject to a customary cash/debt adjustment based on completion accounts.

On completion of the Acquisition, ASSL and Avonline plc will enter into a transitional services agreement pursuant to which Avonline plc will provide all support services to ASSL and its customers for a 12-month transitional period. These services include, but are not limited to: website hosting, customer service, customer communications, technical support, customer billing and full customer acquisition and churn management. No additional consideration is payable for this. In addition, Avonline plc has committed to £250,000 of marketing spend for the duration of the transitional services agreement to promote the satellite business under an agreed marketing strategy.

The Sellers have given customary warranties and tax indemnities appropriate to the scale and nature of the transaction including indemnities against liabilities of Avonline plc pursuant to the restructuring referred to above.

3. The Subscription and BGF

The Subscription

The Company has entered in to a conditional funding agreement with BGF, pursuant to which BGF will provide a total investment of £12.0 million by way of a subscription for new unsecured loan notes (a net new investment of £10.0 million, after redeeming the £2.0 million Existing Loan Notes), comprising £9.6 million Ordinary Notes and £2.4 million Convertible Notes (convertible at 9p per share).

The Ordinary Notes and the Convertible Notes carry a fixed coupon of 10% per annum, with interest payable quarterly in arrears and are repayable in full on 31 May 2024, together with a redemption premium of £5,511,493. The Company has the ability to repay early with the prior consent of BGF but subject to an early redemption payment equivalent to 12 months' interest.

The Company has also agreed to grant BGF an option to subscribe for 74,019,915 new Ordinary Shares, representing 18% of the aggregate of the Company's issued share capital, shares under options and shares under warrants in each case as at the date of the Circular, exercisable at 7.5p per share at any time after whichever is the earlier of the third anniversary of the date of the option agreement, the date the New Loan Notes become due and payable, the date on which BGF receives notice of a change of control of SSW and the date on which the Board declares an interim or final dividend. The Option will lapse on whichever is the earlier of 31 August 2021 and completion of a change of control.

Completion of the Subscription Agreement is conditional upon the passing of Resolutions 1, 2 and 3 at the General Meeting by no later than 25 July 2016, the Acquisition Agreement becoming unconditional in all respects except for the payment of the consideration, there being no material adverse change relating to SSW and there being no material adverse change relating to ASSH.

The Company has given various covenants to BGF regarding the conduct of its business, typical of those required by lenders to growth companies. The Company has agreed, among other things, not to do any of the following without first obtaining the consent of BGF:

· appoint any director or auditor of the Company;

· make any disposal or acquisition of significant assets;

· sell, transfer or otherwise dispose of or purchase, enter into an option to purchase or otherwise acquire any interest in any share capital of any company;

· incur any borrowing; and

· issue or create or grant any option for securities in the capital of the Company, subject to certain limited exceptions.

The Company has also given warranties to BGF which are customary for a transaction of this size and nature. The Directors have given warranties to BGF regarding their personal information. The maximum aggregate liability of the Company under such warranties is the aggregate amount of BGF's investment, subject to a de minimis threshold and a limitation period.

BGF will be entitled to nominate a person to be appointed as a director of the Company at any time following completion of the Subscription.

About BGF

The Business Growth Fund is the UK's most active provider of growth capital to small and mid-sized businesses. The companies it backs are privately-owned or listed on AIM, and typically have revenues of between £5m and £100m. BGF generally makes initial investments of between £2m-£10m and can provide additional funding to support further growth. BGF is an independent company with capital of up to £2.5 billion and is backed by five of the UK's main banking groups: Barclays, HSBC, Lloyds, RBS and Standard Chartered.

4. Current trading and prospects

SSW's current trading continues to be in line with market expectations for the year. The Directors anticipate that the Acquisition will be earnings enhancing from the outset and that the combined customer bases of SSW and the Avonline Broadband Group will provide an excellent springboard for the Company to realise significant revenue and cost synergies and thereby further increase scale and take advantage of the current opportunities in the UK market place - especially given the opportunities created by the UK Government's commitment to support investment to achieve superfast broadband coverage for 95% of the UK by December 2017.

5. Resolutions and General Meeting

A notice convening a General Meeting of the Company, to be held at the offices of Fladgate LLP at 16 Great Queen Street, London, WC2B 5DG at 10:00 a.m. on 25 July 2016 is set out in the Circular.

At the General Meeting, the following Resolutions will be proposed:

1. an ordinary resolution to approve, for the purposes of article 94.2 of the Articles, the borrowing constituted by the issue of the New Loan Notes;

2. an ordinary resolution to grant authority to the Directors to allot Ordinary Shares up to an aggregate nominal amount of £1,006,866 and limited to the allotment of Ordinary Shares arising on conversion of the Convertible Notes and arising on exercise of the Option;

3. a special resolution to dis-apply statutory pre-emption rights in respect of the allotment of the Ordinary Shares referred to in Resolution 2;

4. an ordinary resolution to grant authority to the Directors to allot Ordinary Shares up to an aggregate nominal amount of £2,150,000 in connection with the raising of equity finance to fund future acquisitions. The Company's strategy is to grow organically and by acquisition and therefore is seeking appropriate authority here to enable the Directors to issue shares for cash or as consideration to enable the Company to finance, inter alia, future acquisitions; and

5. a special resolution to dis-apply statutory pre-emption rights in respect of the allotment of the Ordinary Shares referred to in Resolution 4.

6. Action to be taken by Shareholders

Shareholders will find accompanying the Circular a Form of Proxy for use at the General Meeting. Whether or not Shareholders intend to be present at the General Meeting, they are requested to complete, sign and return the Form of Proxy in accordance with the instructions printed on it to the Company's registrar, Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR as soon as possible and, in any event, so as to arrive no later than 10.00 a.m. on 22 July 2016. Completion and return of the Form of Proxy will not affect Shareholders' rights to attend and vote in person at the General Meeting if they so wish. Further information regarding the appointment of proxies can be found in the notes to the Notice of General Meeting.

In the case of non-registered Shareholders who receive these materials through their broker or other intermediary, such Shareholders should complete and send a letter of direction in accordance with the instructions provided by their broker or other intermediary.

Accordingly, it is important that Shareholders vote in favour of Resolutions 1, 2 and 3 in order that the Subscription and Acquisition can proceed.

7. Directors' Recommendation

The Directors consider the Subscription and Acquisition to be in the best interests of the Company and its Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings of 63,186,850 Ordinary Shares, representing approximately 20.5% of the Ordinary Shares.

Yours faithfully

Michael Tobin OBE

Chairman

DEFINITIONS