Avanti gets consents for 89.5% of notes due 2019, allows PIK interest

By Susanna Moon

Chicago, Oct. 17 – Avanti Communications Group plc received consents from holders of 89.5% of its senior secured notes due 2019, which is enough to allow pay-in-kind interest due Oct. 1.

Avanti began the consent solicitation on Sept. 16 as “the first step in its two-phase funding strategy,” according to a company announcement.

In addition to the PIK amendment, holders also approved allowing the company to file its annual report for the fiscal year ended June 30 and its quarterly earnings release for the fiscal quarter ended Sept. 30 by the end of the year on Dec. 31.

The consent payment will be $20.00 per $1,000 principal amount of additional PIK interest on Oct. 18 plus $1.50 per $1,000 of notes in cash for holders who gave their consents by 5 p.m. ET on Sept. 29, the early consent date.

The issuer also will pay the October coupon in cash to the 10.5% of holders who did not consent to the PIK amendment and will pay the non-consenting holders interest in cash on the overdue interest at a rate of 10%, the release noted.

As a result of the solicitation, the October coupon to be paid in cash has been reduced to $3.39 million from $32.25 million, for a total cash saving of about $28 million, net of the consent payment.

“The support of the holders of its senior secured notes for the consent solicitation process represents a significant step toward addressing the company’s financing requirements,” the release added.

As announced Sept. 16, Avanti asked for holder approval to issue the additional notes in lieu of cash for the October coupon, with the issue of $50 of additional notes for each $1,000 principal amount of the notes for which consents are given.

If the company had failed to meet the 90% consent threshold, it could have chosen to terminate the part of the consent solicitation for the PIK amendment and instead enter into a forbearance agreement with consenting holders.

Under the forbearance, holders would agree not to accelerate or take enforcement action on the basis of an event of default under the notes indenture as a result of skipping the October coupon. The company then would have paid a forbearance fee of $2.50 per $1,000 principal amount.

At the time of the announcement, an investor group had contractually agreed to consent to the amendments, which would allow the company to meet a 50% majority consent threshold.

Avanti Communications is a London-based provider of satellite communications in Europe, Africa and the Middle East.

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