TIDMAVN
RNS Number : 5549J
Avanti Communications Group Plc
20 August 2019
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
20 August 2019
Avanti Communications Group plc
Proposed cancellation of the admission of the Ordinary Shares to
trading on AIM
and
Notice of General Meeting
Avanti Communications Group PLC (AIM: AVN) ("Avanti" or the
"Company"), a leading provider of satellite data communications
services in Europe, the Middle East and Africa announces that,
following a thorough review, the Independent Directors (being the
directors of the Company other than Craig Chobor, Michael Leitner
and Adam Kleinman) have concluded that it is in the best interests
of the Company and its Shareholders to seek Shareholders' approval
to cancel the admission of the Company's Ordinary Shares to trading
on AIM (the "Cancellation"). In accordance with Rule 41 of the AIM
Rules, the Company has notified the London Stock Exchange of the
date of the proposed Cancellation.
-- The proposed Cancellation is part of the ongoing
transformation of the Company as the Directors believe the
currently market valuation does not reflect the recent progress the
Company has made, the value of the Group's satellite assets, or the
current market opportunity
-- Recent results allow the Company to reaffirm prior guidance for FY19 and FY20
-- Successful launches of HYLAS 3 and HYLAS 4 provide platform for continued growth
The Independent Directors believe that the Cancellation is in
the best interests of the Company and intend to unanimously
recommend that Shareholders vote in favour of the Resolution at the
General Meeting. The Company has received irrevocable undertakings
to vote in favour of the Resolution from certain shareholders in
respect of an aggregate of 1,345,749,427 Ordinary Shares,
representing approximately 62 per cent. of the existing issued
share capital of the Company.
Pursuant to Rule 41 of the AIM Rules, the Cancellation requires
the approval of not less than 75 per cent. of the votes cast by
Shareholders (whether present in person or by proxy) at the General
Meeting to be convened for this purpose at 9.30 a.m. on 5 September
2019 at the Company's registered office at Cobham House, 20 Black
Friars Lane, London EC4V 6EB. If the Resolution is passed at the
General Meeting, it is anticipated that the Cancellation will
become effective, following the issue of a Dealing Notice, at 7.00
a.m. on 18 September 2019.
The Circular will contain further information on the background
to, reasons for, and the implications of the proposed Cancellation
and will be posted to Shareholders together with a notice convening
the General Meeting, later today. Following publication, the
Circular and notice of General Meeting will also be available from
the Company's website at www.avantiplc.com.
Defined terms used in the Circular shall have the same meanings
in this announcement.
Background to the Cancellation
April 2018 saw three key events that set the foundations for a
new start for the Group's business.
First, the Company welcomed experienced mobile
telecommunications executive Kyle Whitehill as its new Chief
Executive. Within a short period, Kyle had refocussed the strategic
direction of the Group from the consumer broadband markets to
opportunities within the wholesale, government and cellular
backhaul markets. This refined commercial strategy quickly
delivered several material contract wins for the Group worth in
aggregate over US$100 million, including a long-term capacity
agreement with Viasat, Inc., and a master distributor agreement
with Comsat, Inc. to sell Mil-ka capacity to the US Government and
related agencies. By the end of 2018, Avanti was able to announce
bandwidth revenues of US$31 million.
Second, was the successful launch of the Group's HYLAS 4
satellite which enhanced its Ka-band satellite fleet and increased
total capacity over Africa, the Middle East and Europe to 45 GHz.
HYLAS 4 is smartly designed with four powerful steerable beams that
provide dynamic flexibility that is both scarce and in high
demand.
Finally, the Group completed a balance sheet restructuring in
April 2018 which included the repayment of all of the outstanding
2023 Notes, reducing the Group's overall debt by US$557 million.
The restructuring involved a debt-for-equity swap and resulted in
approximately 92.5 per cent. of the enlarged issued share capital
of the Company being held the holders of the 2023 Notes, of which
approximately 61 per cent. of that debt was held by Solus
Alternative Asset Management LP ("Solus"), BlackRock Capital
Investment Advisors, LLC - TCP Group (formerly Tennenbaum Capital
Partners, LLC ("BlackRock") and Great Elm Capital Management, Inc.
("Great Elm").
Since that time, the Group has continued to see steady growth
into 2019, with further contract wins including a long-term
bandwidth agreement with Turkish operator, Turksat, and a five-year
key distribution agreement with MGI Global Services Ltd. to deliver
services and capacity into Chad, South Sudan and Angola. In
addition, the Company was pleased to announce the further
successful launch of its HYLAS 3 satellite.
These efforts enable the Company to reaffirm the previous
revenue guidance for FY 2019 and FY 2020 with total revenues
increasing 67 per cent. and 30 per cent. respectively, from US$53.5
million for the 12 months ended 31 December 2018, which would
include bandwidth revenue growth for the same periods of 125 per
cent. and 40 per cent. respectively, from US$31 million for the 12
months ended 31 December 2018. Further, the Company can also
reaffirm the delivery of its cost optimisation project, which is
expected to reduce total operating costs, excluding equipment and
project-related costs directly off-setting with non-bandwidth
revenue, by at least 15 per cent. per annum by 2020, from
approximately US$80 million for the 12 month period ended 31
December 2018. These measures should result in a positive EBITDA in
2019, with further material growth in 2020.
To continue to deliver on the overall growth strategy of the
business will require significant focus from the Group's
management. Whilst efficiencies have already been realised through
the cost-optimisation project, a programme of continuous assessment
is in place to review all recurring operational costs. As a result
of this, and the factors further considered below, the Independent
Directors are of the opinion that the commercial disadvantages to
the Company of maintaining a quotation outweigh the potential
benefits and the Cancellation will allow management to focus their
time on the ongoing strategy and reducing recurring operational
costs.
Reasons for the Cancellation
The Independent Directors have conducted a comprehensive review
of the benefits and disadvantages to the Company and its
Shareholders in retaining its admission to trading on AIM.
Due to the conflict of interest presented by their position as
representatives of Solus, BlackRock and Great Elm on the Board
respectively, neither Craig Chobor, Michael Leitner nor Adam
Kleinman participated in the Board's consideration of the proposed
Cancellation.
The Independent Directors believe that the Cancellation is in
the best interests of the Company and its shareholders as a whole.
In reaching this conclusion, the Independent Directors carefully
considered the following key factors, amongst other things:
-- As at the date of this announcement and pursuant to the
balance sheet restructuring in April 2018, the ten largest
Shareholders hold, in aggregate, approximately 85 per cent. of the
Ordinary Shares, with approximately 73 per cent., in aggregate,
held by the five largest Shareholders. This has resulted in very
limited free float and liquidity in the Ordinary Shares with the
consequence that the Company's admission to trading on AIM does
not, in itself, offer investors the opportunity to trade in
meaningful volumes or with frequency in the market. In the last 12
months approximately 112 million Ordinary Shares have traded
representing approximately 5 per cent. of the issued share capital
of the Company (source: Factset).
-- The poor performance of the share price over the last 12
months has resulted in a market capitalisation of approximately
GBP26 million which the Directors believe no longer accurately
reflects the Company's value. The Independent Directors believe
that this under-valuation negatively impacts on customer and
supplier engagement. Furthermore, this negative sentiment and
under-valuation of the Company's equity may ultimately impact on
the Company's vision to deliver on its medium-term strategic
objective.
-- Maintaining the Company's admission to trading on AIM
requires significant management time, legal and regulatory
obligations, and comes with material financial costs (such as
professional fees, London Stock Exchange fees and other costs
associated with being an AIM-traded company) that the Independent
Directors believe are disproportionate to the benefits to the
Company. It is estimated that Cancellation will reduce the
Company's recurring administrative costs by approximately
US$500,000 per annum. The Independent Directors are of the opinion
that management time and the cost-savings realised through
Cancellation would be better spent investing in the business and
delivering on the Group's stated strategy.
-- Given the performance of the share price and low liquidity
issues, the Directors have concluded that the only realistic source
of future funding will likely be through private capital. There has
been no equity capital fundraising by the Company in the last four
years, and it is the Independent Directors' opinion that the
Company's admission to trading on AIM no longer provides the
fundamental benefit of giving access to the required investor base
for the Company in order to raise growth capital.
Process for, and principal effects of, the Cancellation
Set out below are some of the implications and principal effects
of Cancellation which Shareholders should be aware of. However,
Shareholders should note that notwithstanding the effects of
Cancellation outlined in this paragraph, the Company will continue
to be subject to certain disclosure and reporting requirements as a
result of the listing of its 2022 Notes on the Irish Stock
Exchange. It will also be subject to the disclosure and reporting
requirements of The International Stock Exchange when it expects to
list the 1.5 Lien Loan Notes later this year. Any such disclosures
or reporting will also be made available on the Company's
website.
Shareholders should further note that the City Code will also
continue to apply to the Company for a period of at least 10 years
from the date of Cancellation. Further, the Company will continue
to be managed in accordance with such provisions of the 2018
Corporate Governance Code as the Board considers practicable and
appropriate given the size of the Group as a whole and nature of
its business activities.
In addition, the Company will remain registered with the
Registrar of Companies in England & Wales and in accordance
with and subject to the Companies Act 2006, notwithstanding the
Cancellation.
In accordance with Rule 41 of the AIM Rules, the Company has
notified the London Stock Exchange of the intention to cancel the
Company's admission to trading on AIM, subject to Shareholder
approval, giving 20 business days' notice. Under the AIM Rules, it
is a requirement that the Cancellation is approved by not less than
75 per cent. of votes cast by Shareholders (in person or by proxy)
at the General Meeting. Subject to the Resolution approving the
Cancellation being passed at the General Meeting, it is anticipated
that trading in the Ordinary Shares on AIM will cease at the close
of business on 17 September 2019, with the Cancellation taking
effect, following issue of a Dealing Notice, at 7.00 a.m. on 18
September 2019.
If the Cancellation becomes effective following the General
Meeting, Shareholders should be aware of the implications and
principal effects of the Cancellation, which include the
following:
-- there will be no public market on any recognised investment
exchange or multilateral trading facility for the Ordinary Shares
and, consequently, there can be no guarantee that a Shareholder
will be able to purchase or sell any Ordinary Shares. The Company,
however, intends to implement the Matched Bargain Facility in order
to give Shareholders an opportunity to trade the Ordinary Shares
should the Cancellation become effective. The details of this
Matched Bargain Facility are set out in more detail in paragraph
titled, Liquidity in trading of the Ordinary Shares following the
Cancellation, below;
-- in the absence of a formal market and quote, it will be more
difficult for Shareholders to determine the market value of their
investment in the Company at any given time;
-- the regulatory and financial reporting regime applicable to
companies whose shares are admitted to trading on AIM will no
longer apply;
-- Shareholders will no longer be afforded the protections given
by the AIM Rules, such as the requirement to be notified of certain
events and the requirement that the Company seek shareholder
approval for certain corporate actions, where applicable, including
substantial transactions, financing transactions, reverse
takeovers, related party transactions and fundamental changes in
the Company's business, including certain acquisitions and
disposals;
-- the levels of disclosure and corporate governance within the
Group may not be as stringent as those for a Company quoted on
AIM;
-- AIM Rule 26, obligating the Company to publish prescribed
information on its website, will cease to apply;
-- the Company will cease to have a nominated adviser and broker; and
-- the Cancellation may have personal taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax
position should consult their own independent tax adviser.
The above considerations are not exhaustive, and Shareholders
should seek their own independent advice when assessing the likely
impact of the Cancellation on them.
Liquidity in trading of the Ordinary Shares following the
Cancellation
The Directors are aware that the proposed Cancellation, should
it be approved by the Shareholders at the General Meeting, would
make it difficult to buy and sell Ordinary Shares should they wish
to do so. Accordingly, the Company intends to implement the Matched
Bargain Facility to assist Shareholders to trade in the Ordinary
Shares with effect from the date of Cancellation.
The Matched Bargain Facility will be provided by JP Jenkins. JP
Jenkins is part of Peterhouse Corporate Finance Limited, which is
authorised and regulated by the FCA, a Member of the London Stock
Exchange and a NEX Exchange Corporate Adviser. Under the Matched
Bargain Facility, Shareholders or persons wishing to acquire or
dispose of Ordinary Shares will be able to leave an indication with
JP Jenkins, through their stockbroker (JP Jenkins is unable to deal
directly with members of the public), of the number of Ordinary
Shares that they are prepared to buy or sell at an agreed price. In
the event that JP Jenkins is able to match that order with an
opposite sell or buy instruction, they would contact both parties
and then effect the bargain. Should the Cancellation become
effective and the Company put in place the Matched Bargain
Facility, details will be made available to Shareholders on the
Company's website at https://investor.avantiplc.com/ and directly
by letter or e-mail (where appropriate).
Taxation
Shareholders are strongly advised to consult their professional
advisers about their own personal tax position arising in
connection with the Cancellation.
The General Meeting
The General Meeting is to be held at 9.30 a.m. on 5 September
2019 at the Company's registered office at Cobham House, 20 Black
Friars Lane, London EC4V 6EB, at which the Resolution will be
proposed for the purposes of approving the Cancellation.
The Resolution will be proposed as a special resolution and
therefore requires the approval of not less than 75 per cent. of
the votes cast by Shareholders (whether present in person or by
proxy).
Irrevocable undertakings
The Company has received irrevocable undertakings to vote (or
procure the vote) in favour of the Resolution at the General
Meeting from each of Solus, BlackRock and Great Elm in respect of
an aggregate of 1,345,749,427 Ordinary Shares, representing
approximately 62 per cent. of the existing issued share capital of
the Company.
Recommendation
The Independent Directors consider the Cancellation to be in the
best interests of the Company and its Shareholders as a whole and
therefore intend to unanimously recommend that Shareholders vote in
favour of the Resolution to be proposed at the General Meeting as
they intend to do so in respect of their own beneficial holdings
amounting, in aggregate, to 179,004 Ordinary Shares, representing
approximately 0.01 per cent. of the existing issued share capital
of the Company.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2019
Announcement of the proposed Cancellation 20 August
pursuant to AIM Rule 41
Publication and posting of the Circular 20 August
and Form of Proxy to Shareholders
Latest time and date for receipt of completed 9.30 a.m. on 3 September
Forms of Proxy and CREST voting instructions
General Meeting 9.30 a.m. on 5 September
Expected last day for dealings in Ordinary 17 September
Shares on AIM
Expected time and date of Cancellation 7.00 a.m. on 18 September
following issue of Dealing Notice
Note:
Each of the times and dates in the above timetable is subject to
change. If any of the above times and/or dates change, the revised
times and dates will be notified to Shareholders by an announcement
through a Regulatory Information Service.
For further information, please contact:
Avanti Communications Nigel Fox
Tel: +44 (0)20 7749 1600
Cenkos Securities (Nomad) Max Hartley, Katy Birkin
Tel: +44 (0)20 7397 8900
Newgate Communications Adam Lloyd
Tel: +44 (0)20 3757 9842
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will", or
"should" or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include
matters that are not historical facts. They appear in a number of
places throughout this announcement and include statements
regarding the Directors' current intentions, beliefs or
expectations concerning, among other things, the Company's results
of operations, financial condition, liquidity, prospects, growth,
strategies and the Company's markets. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. Actual results and
developments could differ materially from those expressed or
implied by the forward-looking statements. Forward-looking
statements may and often do differ materially from actual results.
Any forward-looking statements in this announcement are based on
certain factors and assumptions, including the Directors' current
view with respect to future events and are subject to risks
relating to future events and other risks, uncertainties and
assumptions relating to the Company's operations, results of
operations, growth strategy and liquidity. Whilst the Directors
consider these assumptions to be reasonable based upon information
currently available, they may prove to be incorrect. Save as
required by applicable law or by the AIM Rules, the Company
undertakes no obligation to release publicly the results of any
revisions to any forward-looking statements in this announcement
that may occur due to any change in the Directors' expectations or
to reflect events or circumstances after the date of this
announcement.
All references to time in this announcement are to London time,
unless otherwise stated.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
NOGGMGMRGLZGLZZ
(END) Dow Jones Newswires
August 20, 2019 02:01 ET (06:01 GMT)
Avanti Communications (LSE:AVN)
Historical Stock Chart
From Nov 2024 to Dec 2024
Avanti Communications (LSE:AVN)
Historical Stock Chart
From Dec 2023 to Dec 2024
