Avanti Communications Group Plc, the U.K. satellite operator seeking to sell itself, asked bondholders to accept new senior notes instead of cash interest payments to help ease a financial squeeze.
The plan covers payments due next month on $645 million of 2019 bonds, according to a statement on Friday. Mast Capital Management and Solus Alternative Asset Management, which own a combined 60 percent of the debt, both support the proposal, an Avanti spokesman said by e-mail. Mast and Solus, among Avanti’s biggest shareholders, both declined to comment on the plan.
Avanti has also started work on a “long-term funding solution,” and it is continuing discussions with potential investors and acquirers, it said. The London-based satellite operator has run into trouble because overcapacity in the satellite industry has weighed on sales and earnings.
“This refinancing is only a part-solution,” said Eric Beaudet, a Paris-based analyst at Natixis SA. “They’re going to have the same problem six months from now. The issue is not resolved entirely.”
The payments due next month total $32.25 million, Avanti said. The company will use notes to pay all of the coupons, if 90 percent of bondholders accept the proposal. If that threshold isn’t met, then holders who agree to the plan will get notes and investors who don’t will receive cash.
The deadline for bondholders to agree to the plan is Oct. 14. Holders who accept by Sept. 29 will get bonuses payments, which could increase the total amount of new notes issued to as much as $45.2 million.