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Avanti Communications share suspension on December 30? New bond default?

By Tom Winnifrith, The Sheriff of AIM | Friday 9 December 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.


Well here is an early Christmas present for all good bears, Avanti Communications (AVN) has sort of fessed up to the fact that its shares may be suspended from the AIM Casino on 30th December and that it may be facing a new bond default. Oh dear. If that is not a cue to sell as fast as you can, what is?

Mid morning yesterday Avanti put out a bland statement "Notice of AGM". Why announce at 10.32 AM and not at 7 AM like normal folks? But the content was less than bland.

Avanti announces that a notice of its Annual General Meeting ("AGM") has been posted to shareholders and is available to download from the Company's website at www.avantiplc.com. The Company is not in a position to publish its audited accounts for the 12 months ended 30 June 2016, until the conclusion of the strategic review announced on 11 July 2016 under which a variety of activities are progressing. As such, it is expected that the resolutions relating to the laying of the annual report and accounts, appointing KPMG LLP as auditor of the Company and authorising the Directors to determine the remuneration of the auditor will be proposed at a subsequent general meeting to be convened in early 2017.

Oh dear. So no annual report yet? AIM Rule 19 is clear. If there is no annual report within six months of the year end your shares are suspended. Of course Avanti might get its report out by Christmas, but it might not.

As a bonus, failure to get the annual report out by December 31 would also cause problems with the bondholders who agreed to take more worthless bonds rather than cash as their interest payments in October. As part of that keep the lights on deal Avanti said that:

The consents received in the Consent Solicitation also permit the Company to furnish its annual report for the fiscal year ended 30 June 2016 and its quarterly earnings release for the fiscal quarter ended 30 September 2016 to the Senior Secured Notes trustee by no later than 31 December 2016.

Ahead of an AGM which is on a day when few will attend to ask tough questions: Sell.


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