Avanti gets OK to amend 10%/15%, 12%/17.5% notes for restructuring

By Susanna Moon

Chicago, Feb. 8 – Avanti Communications Group plc said it received consents from holders representing 98.09% of its 10%/15% senior secured notes due 2021 and 87.73% of its 12%/17.5% senior secured notes due 2023.

As a result, Avanti has executed supplemental indentures to the note indentures for each series, according to a company announcement.

The company said on Jan. 25 that it was holding four concurrent and distinct solicitations in connection with the proposed debt restructuring announced Dec. 13.

For the 2021 majority consent solicitation, the company was seeking consents from holders representing at least a majority to remove from the definition of events of default any event that occurs in connection with the implementation of a restructuring, including an application under Chapter 15 of the U.S. Bankruptcy Code for recognition of an English law scheme of arrangement as well as to waive any default as a result of the restructuring.

The 2021 majority consent solicitation ended at 5 p.m. ET on Feb. 7.

The majority proposed amendments have become operative, the company added.

The jurisdiction proposed amendments will become operative upon the payment of the consent payment of $0.05 per $1,000 principal amount of 2023 notes, which is expected to occur by Feb. 19.

The 90% proposed amendments will become operative upon the payment of the consent payment of $2.50 per $1,000 principal amount of 2021 notes and closing of the restructuring.

Because the company secured the required consents for the 90% proposed amendments, it said it will no longer pursue an English law scheme of arrangement for those amendments.

No consent payment will be made in connection with the 2021 majority consent solicitation.

For the 2021 90% consent solicitation, Avanti was also seeking consents from holders representing at least 90% of 2021 notes to:

• Eliminate the maintenance of minimum consolidated EBITDA covenant, which would require testing on the last day of each fiscal quarter beginning March 31, 2018 and ending March 31, 2020;

• Permit the issue of additional debt, capped at $30 million and ranking junior to or pari passu with the 2021 notes;

• Extend the final maturity of the 2021 notes to Oct. 1, 2022 from Oct. 1, 2021;

• Change interest payable on the 2021 notes to 9% cash interest or 9% pay-in-kind interest for all remaining interest periods beginning Oct. 1, 2017 from 10% cash interest or 15% PIK interest;

• Eliminate the margin increase payable on the 2021 notes if the relevant minimum consolidated EBITDA threshold was not met; and

• Permit interest payments on the 2021 notes for all remaining interest periods beginning Oct. 1, 2017 but excluding the final interest payment to be paid in kind if the company lacks cash to pay the coupon.

The 2021 90% consent solicitation was set to continue until 5 p.m. ET on Feb. 22.

For the 90% consent solicitation, holders will receive $2.50 in cash per $1,000 principal amount for consents for the 90% proposed amendments delivered before 5 p.m. ET on Feb. 7. Holders must be of record as of 5 p.m. ET on Jan. 24.

If the 90% consents were not received before the solicitation ended, the company had planned to seek to implement the 90% proposed amendments under the scheme and no 2021 consent payment would have been made.

For the 2023 majority consent solicitation, the company is also asking for a majority of consents from holders of its 2023 notes for amendments and waivers to the 2023 indenture that are analogous to the majority proposed amendments and the majority proposed waiver.

The 2023 majority consent solicitation also ended at 5 p.m. ET on Feb. 7.

No consent payment will be made in connection with the 2023 majority consent solicitation.

For the 2023 75% consent solicitation, the company is also soliciting consents from holders representing at least 75% of its 2023 notes to amend the submission to jurisdiction provision of the 2023 indenture to require that each party to the 2023 indenture submit to the jurisdiction of the Court of England and Wales until the restructuring agreement is either terminated or is no longer in effect, the release noted.

The 2023 75% consent solicitation was set to continue until 5 p.m. ET on Feb. 22. The 2023 75% consent solicitation is conditioned on completion of the 2023 majority consent solicitation and the receipt of the 75% consents before the 2023 75% offer ends.

Holders representing about 80% of the outstanding 2021 notes and 71% of the outstanding 2023 notes had entered into a restructuring agreement to give their consents in each solicitation.

If the conditions to the 2023 75% consent solicitation is satisfied or waived, the company will pay $0.05 in cash for each $1,000 principal amount to each holder of record as of 5 p.m. ET on Jan. 24 who has delivered consents for the jurisdiction proposed amendments before 5 p.m. ET on Feb. 7.

The company also noted that its working capital position has “stabilized following the provisions made in the fiscal year ended June 30.”

“The main variable remains the ongoing arbitration for the recovery of the debt due from the ministry of defense of the government of Indonesia ... The company is confident that it will recover the full outstanding amount.”

As of Dec. 31, the company had cash and cash equivalents of about $68 million.

D.F. King & Co., Inc. (800 714-3311, 212 269-5550 or avn@dfking.com) is the information and tabulation agent.

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

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