Avanti announces shareholders meeting tied to restructuring proposal

By Caroline Salls

Pittsburgh, April 9 – Avanti Communications Group plc said it posted to shareholders on Monday a circular in connection with a proposed restructuring of the group’s debt, a proposed waiver of obligations under Rule 9 of the City Code on Takeovers and Mergers and a proposed open offer.

A general meeting of shareholders will be held on April 25.

Avanti said the proposed restructuring calls for a debt-for-equity swap under a scheme approved by the High Court of Justice in England and Wales of all of the company’s outstanding 2023 notes for 92½% of its enlarged share capital following the issuance of exchange shares.

The restructuring also includes an offer for subscription by existing shareholders under an up to £4.33 million open offer.

In addition, the restructuring proposal calls for an amendment to some terms of the 2021 notes through a consent solicitation, the amendment and waiver of some standard events of default in the 2021 and 2023 notes indentures that might otherwise be triggered by the restructuring and an amendment to the submission to jurisdiction provision of the 2023 notes indenture to require that each party to the 2023 notes indenture irrevocably submits to the jurisdiction of the High Court of England and Wales until the restructuring agreement is either terminated or is no longer in effect.

If the debt-for-equity swap and open offer are completed, Avanti said the Solus funds will hold up to a maximum of 42% of the enlarged share capital.

The company said the restructuring is conditional upon the granting of a waiver by the Panel on Takeovers and Mergers, and also upon the approval by the independent shareholders of that waiver on a poll at a general meeting related to the obligation to make a general offer under Rule 9 of the Takeover Code that would otherwise fall upon Solus as a result of the issue and allotment of new ordinary shares.

The restructuring and the open offer are conditional upon the company obtaining approval from its shareholders to disapply statutory pre-emption rights and to grant the board authority to allot ordinary shares.

As of Dec. 31, the company said it had $118 million of debt maturing in 2020, $323.3 million maturing in 2021 and $557 maturing in 2023.

According to the release, if the restructuring is not completed by April 30, the company will default on its bond interest payable under the existing bond indentures.

If the restructuring is completed but Avanti is unable to raise additional funds of at least $50 million and secure $40 million infrequently recurring revenue in pipeline by June 30, the company will, within the three months following June 30, be highly likely to be unable to pay its creditors when payments fall due.

In these events, the company said its directors would likely seek to place it into some sort of insolvency proceeding, or a creditor may take action to enforce or initiate an insolvency proceeding.

London-based satellite communications provider Avanti made a Chapter 15 bankruptcy filing on Feb. 21 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 15 case number is 18-10458.

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