UK-based satellite operator Avanti Communications has raised approximately £73.8m (US$116.4m) from a conditional share placement. Proceeds are to be used to help fund the company’s third satellite, Hylas-3, which will be a hosted payload on a new…
UK-based satellite operator Avanti Communications has raised approximately £73.8m (US$116.4m) from a conditional share placement. Proceeds are to be used to help fund the company’s third satellite, Hylas-3, which will be a hosted payload on a new European Space Agency satellite.
Avanti issued 26,785,714 new ordinary shares at 275.5p, a 2% discount on the last day of trade prior to the transaction. The new shares will represent about 24% of the company’s newly enlarged share capital following their admission to London’s AIM exchange on 23 February 2012.
The new shares are being acquired by both existing and new institutional investors with UK-based funds M&G Limited and Caledonia Investments, committing to purchase 9.28 million and 2.4 million shares respectively. This will increase M&G’s stake from 14.72% to just over 23% and Caledonia’s from 14.99% to 17.16%. Avanti’s directors, including co-founder and CEO David Williams, have also agreed to subscriber to the placement.
Cenkos Securities acted as Avanti’s adviser and broker for the placement.
The satellite operator said that proceeds would enable it to fully fund the cost of the design, construction and launch of the Hylas-3 hosted payload. Avanti was selected by ESA to be the hosted payload partner following a competitive tendering process conducted during 2011. Final contractual terms are due to be agreed and contracts signed in March 2012 with the satellite due to be launched to one of Avanti’s orbital locations in 2015.
Avanti stated that its ability to raise finance to fund its part of the project was a huge factor in ESA selecting it and that as part of its successful final submission, the company committed to raising the capital required in advance of final contract signature. Avanti had also collaborated on ESA’s first public private partnership which led to the launch of Hylas-1.
Hylas-3 is planned to have up to 4GHz of Ka-band capacity with eight steerable beams providing coverage over Africa and the Middle East, where it will support Hylas-2. Avanti said that following the launch of Hylas-3, 80% of its capacity will address the telecoms market in Africa and the Middle East.
Explaining why it chose to develop Hylas-3 as a hosted payload rather than a separate satellite, Avanti said that it would significantly reduce costs relating to the satellite platform, launch vehicle, insurance and project management. The company said that this would it to benefit from a satellite project cost per GHz that is more than 40% cheaper than Hylas-2.
In addition, under the terms of ESA’s proposals, Avanti would not be liable for any potential cost over-runs relating to the construction of the satellite bus.
Avanti stated: “The advantage of pursuing the development of Hylas-3 in this manner is that it would provide additional capacity at a lower risk and considerably lower price than the capacity derived from both Hylas-1 and Hylas-2 and that no further debt would be required for Hylas-3.”
While Avanti continues to see global demand for Ka-band growing rapidly, it does not plan to order another separate satellite at present, pointing to the current economic climate as a reason not to pursue further equity fund raisings. It does, however, intend to move from the smaller AIM exchange to the full London Stock Exchange in 2013.
Hylas-2, which is three times as powerful as Hylas-1, is currently on track for a June 2012 delivery date and Avanti has notified Arianespace of its intention to launch within a one month window from 30 June 2012.
