Avanti sheds $550 million of debt to free up growth plan

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TAMPA, Fla. — British satellite operator Avanti said April 13 it has cut its $810 million debt pile by two-thirds after investors agreed to swap debt for equity.

Hedge funds Solus Alternative Asset Management and new investor HPS Investment Partners are now Avanti’s largest shareholders following a deal that reduced debt to $260 million.

Avanti said it is not changing its business activities, assets or executive team as part of the recapitalization.

“Achieving this significant reduction in our legacy debt burden leaves us in a strong position to continue the growth of our business,” Avanti CEO Kyle Whitehill said in a statement.

Avanti provides broadband services across Europe, the Middle East and Africa with a fleet of five Ka-band satellites, but has struggled to generate enough revenue to pay back debt.

In 2019, the company adjusted its business strategy away from consumer broadband to focus more on cellular backhaul, governments and selling capacity to other satellite operators. 

Pointing to signs of progress with this growth plan, Whitehill told SpaceNews in 2020 that Avanti aimed to increase its fleet fill rate from 48% to around 70-80% to be more in line with leading fleet operators.

Avanti was unable to give an update on fleet utilization before this article was published. 

With less debt, the company hopes to close the chapter on long-running financial issues that in 2018 saw Avanti swap another chunk of debt for equity after warning it risked collapsing into administration — a U.K. procedure similar to declaring bankruptcy.

Avanti put itself up for sale in 2017 but, after failing to get any acceptable offers, abandoned the plan later that year in favor of a $242 million debt refinancing package.

HPS Investment Partners declined to comment on what led the investor to become one of Avanti’s largest shareholders.

Before its latest recapitalization transaction, Solus and investment firms Blackrock and Great Elm Capital were Avanti’s largest shareholders.

Blackrock and Great Elm Capital remain invested in the company after reducing their stakes, alongside investment firms Robus and MSD that also continue to be shareholders.