5th Feb 2015 08:21
LONDON (Alliance News) - Avanti Communications Group PLC Thursday said it has raised GBP60.6 million by issuing new shares as part of a financing that fully funds the construction and launch of the HYLAS 4 satellite and takes it through to the point when it expects to be cash flow positive.
In a statement, the satellite data communications services provider said the issuance of 28.9 million new shares to new and existing institutional investors at 210 pence per share fully funds the costs of HYLAS 4, the larger of the two satellites it has under construction, when combined with its ability to issue up a further USD125 million under its existing bond indenture following the high-yield bond financing conducted in 2014.
Avanti said it considered a range of funding options and was in receipt of an underwritten mezzanine debt offer, before settling on the equity raising as the "strongest" option.
The equity capital raising, which Avanti expects to increase its future cash generation potential, came as the group reported a widening of its first-half pretax loss.
Avanti reported a pretax loss of USD48.1 million for the six months ended December 31, 2014, compared with USD41.8 million in the corresponding period of the prior year, even though revenue rose by 24% to USD31.1 million. Satellite depreciation and other costs outweighed the revenue increase, rising to USD42.6 million from USD37.5 million. Operating expenses were also up, rising to USD17.4 million from USD16.6 million.
The group also said it expects a "material increase" in revenue in the third quarter, citing recently awarded contracts.
"Full year organic growth expectations before the negative impact of FX translation, are underpinned by a combination of the expected growth in Q3 and contracts that are still to be finalised, but are currently well progressed in Avanti's order pipeline," the company said.
The group said the "substantial and visible pipeline" of new business it expects win over the next 12 months, combined with higher sales to existing customers through framework contracts, is expected to to drive "significant" revenue growth.
"In the longer-term, we remain confident that Avanti's infrastructure has the potential to deliver over USD500 million of EBITDA (earnings before interest, tax, depreciation and amortisation) annually. Our positive revenue growth outlook, together with the recent capital raise to secure the funding of HYLAS 4, which was strongly supported by new and existing blue chip investors, help to underpin our trajectory to this point," David Williams, chief executive, said in a statement.
Avanti shares were up 1.9% at 230.20 pence on Thursday.
By Samuel Agini; [email protected]; @samuelagini
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