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Avanti's next cash crunch could be far sooner than people think - in fact it could be in two weeks' time

By Tom Winnifrith, The Sheriff of AIM | Wednesday 14 June 2017

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.

It is not a matter of IF drowning in debt satellites company Avanti Communications (AVN) will eventually see a 100% shareholder wipeout ( right now it is c99%) but WHEN. And it might be rather sooner than most folks think. In two weeks time to be exact. Is there something that its CEO , the bombastric Welsh prick David Williams, is not telling us as he counts his $15-20 million winnings.

The headline of the 20th December RNS was economical. It trumpeted a $242 million refinancing. Most people probably thought this was a great result. But dig in 2 layers, and it's not nearly as good as the spin suggests.

Layer 1: of the headline $242 million, $112 million is interest deferral - so not actual cash to pay for things like building satellites, launching satellites or funding the huge day to day cash outflow including Williams's luncheon costs, just not having to pay cash out in the future to the bondholders.

Layer 2: This is where things are interesting; Williams proclaimed $130 million of new cash funding. However, this was split $80 million upfront but the remaining $50 million was due in two tranches of up to $15 million on 30th June 2017 and $35 million on 30th November. But it's only on page 4, after screeds of repetition and the 4th time that the $50 million is mentioned that you discover that these payments are not certain. In fact, they are:

"subject to certain conditions being satisfied on the draw down dates, including there having been no default in respect of any indebtedness of the Company and no material adverse change having occurred."

So what are these "certain conditions" and have they been met or is there the prospect that Aavanti won't receive its cash on 30th June? I think the company should tell its long suffering shareholders.....

its silence is yet another reason why, at 8p, the shares are a slam dunk sell. The target price remains 0p.

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