UK-based satellite operator Avanti is to raise £60.6m (US$91.5m) through a capital raising that will complete the funding requirements for the construction and launch of its Hylas 4 satellite.
The company is selling 28.87 million new ordinary shares at…
UK-based satellite operator Avanti is to raise £60.6m (US$91.5m) through a capital raising that will complete the funding requirements for the construction and launch of its Hylas 4 satellite.
The company is selling 28.87 million new ordinary shares at £2.10 per share, a 5.7% discount to Avanti’s closing middle market price of £2.23 on 4 February.
The placement, which is subject to shareholder approval, was oversubscribed and has been supported by both new and existing equity investors as well as Avanti’s bondholders. Cenkos Securities is acting as financial adviser and broker to Avanti on the financing.
The new shares will represent around 20.4% of the group’s issued ordinary share capital.
Avanti said that it considered a range of funding options and was in receipt of an underwritten mezzanine debt offer. The board, in consultation with shareholders, felt that the capital raising was the strongest option.
Proceeds from the fund raising, together with the consent Avanti has under its existing bond indenture to issue up to a further US$125m tap of its high yield bond, secures both the funding of Hylas 4 and the group to the point where its cash flows are expected to fund the business.
Avanti raised US$157.5m from a US bond offering in mid-2014. The placement was a tap issue on the US$370m debut bond offering of unlisted 10% senior secured six-year notes that the company completed in September 2013.
Orbital Sciences was contracted to construct Hylas 4 in August 2014 with Arianespace selected as the launch service provider shortly after.
Based on Orbital’s GEOStar-3 satellite platform, the spacecraft is expected to be able to deliver up to 120 Gbps of throughput via 66 fixed beams and four steerable beams positioned over Africa and Europe. The satellite is due to be launched in early 2017.
The total cost of the project will be approximately US$300m. Avanti said that capital expenditure is weighted towards launch, with final negotiations recently deferring a further US$30m of expenditure into the 2017 financial year.
Avanti announced its capital raising in parallel with its H1 fiscal 2015 results. The operator reported a 24.4% increase in revenues to US$31.1m, compared to US$25m in H1 2014. However, the company’s net loss for the period increased US$6.3m to US$48.1m, while EBITDA, before ex gratia receipt and non-cash share based payment expense, was a US$3.5m loss. The company’s revenue backlog closed at US$410m.
Avanti added that work has been on-going during H1 2015 to ensure that its ground infrastructure can support the planned new satellites without materially changing the cost base. Critical to this is its proprietary Avanti Cloud software. The group said that a number of patents are pending in relation to this system, which it argues will change the way satellite service providers work.
