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The market responded coolly to Avanti Screenmedia’s decision to split the business in two – with the networks business (which is planning to operate a satellite in two years’ time) being hived off into a separate business, Avanti Communications. Existing holders in Avanti will receive shares for free in the new company.

The response may have something to do with the accompanying news of another share placing – this time at 315p to raise £5 million. That comes as a surprise. In early October the company said it still had £10 million in cash in the bank. Some £3.5 million of the new funds raised will go into the communications business. Caledonia Investments is effectively underwriting the deal.

The decision to split the business does not look a bad one. It will allow the existing screen media business to be valued on a straight earnings multiple, leaving the market to value the future income stream from the satellite business quite separately. Tipped here 14 months ago at 246.5p, the shares remain a firm hold.

Avanti Screenmedia Group	AIM	£0.95m	1.62p	-0.25p
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Other company articles:
Avanti fixes new funding			18/07/2008
Avanti Screenmedia’s double whammy			02/07/2007
The evolution of Ora			19/04/2007
Avanti Screenmedia does the splits			23/03/2007
Avanti does the splits			14/12/2006