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Avanti - keep selling

By Lucian Miers | Saturday 7 May 2016

Disclosure: The author has been remunerated by the company concerned for writing this article. Shareprophets Ltd has not received any remuneration for publishing it and does so merely as the article seemed to be of some interest.

I note that Avanti’ Communicvations' (LSE:AVN) share price has fallen back since it was covered in detail by Tom, myself, Matt Earl and Evil at last week’s UK Investor Show.

While it would be nice to say that the two are connected I suspect that the more likely reason is the announcement of a venture between Facebook and ESA to provide satellite broadband coverage in Africa.

This effectively scotches the Avanti/Facebook tie up rumours that are usually whispered before a fund raise. And there will be a fund raise because if there is not then the only question is when, not if, Avanti runs out of cash. 

But it seems to me that the bombastic CEO David Williams has run out of ways to ramp the shares in order to get any sort of fund raising away. The yield on his existing bonds is well over 20% which cuts out the junk bond route and as the share price continues to tumble - the shares are now 89.5p to sell - an equity placing also looks hard for the bombast to complete.

And thus Avanti may well not be able to raise funds at all and that would see shareholders facing a total wipeout. This is looking good for a zero.

This article first appeared on the Nifty Fifty website which Lucian Miers runs with Tom Winnifrith & Steve Moore - sorry, it is paying customers first. To access the website ahead of the next share tip from Tom & Steve and a new shorting idea from Lucian shortly GO HERE

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