By Tom Winnifrith, The Sheriff of AIM | Monday 6 June 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
On May 16 Avanti Communications once again (AVN) lied to its investors. Since then it has been scrabbling around trying to complete an emergency refinancing. As the shares have tanked from 90p to 64p (and falling) since the lie is it unfair to ask the company and its bombastic CEO David Williams how things are going? First, however, lets look at the lie.
On 16 May Avanti stated:
Period end cash was $122.4m. Avanti has additional consented credit capacity of $71.0m. As planned, the Group has made good progress towards securing additional liquidity. Several different facilities have been offered and the most attractive is in documentation.
You will note the use of the words "as planned" with reference to taking on even more debt even though Avanti is fecking drowning in the stuff. Now have a butchers at the RNS the bombast signed off on on 4 February 2016
On the basis of our expectation of 50% annual continuing business revenue growth and Avanti's strong liquidity position, the Group's business plan is fully funded through to the launches of HYLAS 3 and 4 in 2017, with positive EBITDA expected from the second half of the financial year ending 30 June 2016.
Avanti has fixed cost bond finance at 10%, which is not repayable until October 2019 when we would expect to refinance it at lower rates. The Group held period end cash of $162.6m and furthermore has consent to draw down up to a further $71.0m in credit from multiple facilities. We do not expect to need to use this, but it does mean that Avanti has surplus cash headroom at the low point in our own business plan in mid-2018 of over $90 million, giving us very strong headroom and full confidence in our full funding to maturity.
Apart from gaping at how Avanti has managed a three month cash spunk of $40 million you will no doubt have noticed that on February 4 Avanti said it did not expect to have to find another $71 million to borrow. Yet by May 16 doing this was something was planned. Which was it Williams you mother? Did you lie via RNS on 4 February or on May 16?
And so the pompous Welshman told us three weeks ago that documentation on a loan facility was in the offing. Well done old boy. Given that I could buy Avanti debt ( existing bonds) yielding 24% in the secondary market ( junk bonds on rocket launchers) how much are you offering anyone foolish enough to want to lend your Avanti more cash? Is there an equity element? is that why your shares are tanking?
I know an update on your woes is not "planned" but as shareholders face ,mega dilution or worse, how about Mr Williams starts to earn his $1 million a year reward for failure package and tells us what is going on?
From Avanti news is usually highly spun bad news and no news is worse. The shares remain a sell at 64p - target buttons.
PS If Williams and his comrades at Avanti want to threaten me with a lawyers letter, go ahead bitchez, make my day - see you in Court. We know he bullies Bulletin Board posters who merely remind folks of how Williams boasted of misleading his investors. If the self-important Welshman wants to try bullying me he will not find it so easy.
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