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UK’s Avanti Communications Group Secures $55 Million Credit Line

Artist’s rendering of Avanti’s Hylas-4. Image courtesy of Orbital ATK.

Avanti Communications Group Plc has announced that it has now closed its new U.S.$55 million two-year 1.5 lien credit facility.

The 1.5 Facility matures in May 2021 or, if the Company’s existing super senior facility (the “Super Senior Facility”) is extended, in July 2021. Loans made under the 1.5 Facility will bear PIK interest at an annual rate equal to 12.50%. The 1.5 Facility ranks senior relative to the Company’s high yield notes and junior relative to the Company’s existing super senior debt under the Super Senior Facility for the priority of payment of enforcement proceeds. The Company will use the proceeds of the loans under the 1.5 Facility to fund capital expenditures and working capital needs of the Company and its subsidiaries.

The Company has also obtained consent from the lenders under the Super Senior Facility to extend, at its election, the maturity to January 2021, subject to the payment of an extension fee. The annual interest rate under the Super Senior Facility has been reset to 9.5%.

Avanti confirms that the audited financial results for the 18-month period to 31 December 2018 will be published on or around 7 June 2019. As a result of this being later than anticipated, it will not be possible for the accounts to be laid at the Annual General Meeting currently scheduled for 24 June 2019. These financial statements will therefore be laid at a separate general meeting as soon as practicable thereafter.

The Company is also pleased to reconfirm the outlook statement it released on March 28, 2019. Bandwidth revenues for the 12 months to December 2018 are expected to be approximately U.S.$32 million. This excludes low margin project and equipment revenues. Bandwidth revenues are forecast to increase by 125% in 2019 and at least a further 40% in 2020. The growth is anticipated to come from government business on HYLAS-4 and HYLAS-3, once operational.

Underlying costs of delivering bandwidth is around U.S.$80 million. However, the Company has instigated a cost optimisation project, which is expected to reduce the costs associated with bandwidth sales by at least 15% per annum by 2020.

These measures should result in a positive EBITDA from the bandwidth business in 2019, with further material growth in 2020.

In addition to the outlook statement released on 28 March 2019, the Company confirms that HYLAS-3 is expected to launch on 24 July 2019 from French Guiana on an Ariane 5 launch. The launch of HYLAS-3 will complete this satellite asset capital expenditure cycle for Avanti, and will bring additional steerable Ka-band capacity to the current fleet.

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