Last year, in-flight communications operator Gogo split itself into two. It sold its airline passenger commercial division to Intelsat for $400 million. It is now refinancing its private aircraft business communications division.
Gogo said on April 1st that it had started a convertible debt exchange and the beginning of a refinancing process, marking significant progress in its efforts to complete a comprehensive refinancing.
Gogo has some 1,700 business aircraft flying with its Avance L5 or L3 systems and equipment on board, and another 5,778 aircraft using another Gogo system.
“Under the exchange agreement (the “Agreement”), GTCR, a leading private equity firm, will convert all of its $105.7 million principal amount of Gogo’s 6 per cent Convertible Senior Notes due 2022 (the “Notes”) into shares of Gogo’s common stock. In addition, on March 30th 2021, Gogo appointed Mark Anderson, MD at GTCR, to Gogo’s Board of Directors.”
“These two important steps accelerate Gogo’s progress in lowering our leverage ratio and interest expense, and creating greater overall financial flexibility,” commented Oakleigh Thorne, Gogo’s Chairman and CEO. “As an agile, focused company with a stronger balance sheet, Gogo will be well-positioned to capitalise on the market opportunity in front of us and drive sustainable shareholder value.”
Thorne continued, “GTCR has been a strong supporter of our strategy and we welcome their ongoing partnership. I look forward to working closely with Mark, and the rest of the Gogo Board, as we execute on our shared vision to drive lasting success.”
The new agreement will see GTCR receive 19.1 million shares of Gogo common stock, based on a conversion premium of 4 percent plus remaining unpaid interest payments on the Notes through maturity, bringing its total ownership to 28.6 per cent of Gogo’s shares outstanding.
Upon completion of the equitisation, which is expected to occur by mid-April, Gogo will have 111.1 million shares of common stock outstanding and total debt of approximately $1.078 billion, a reduction of $135 million from total debt at December 31st 2020 as a result of the Agreement with GTCR and prior convertible note exchanges that Gogo executed in 2021. Gogo had approximately $455 million of cash-on-hand as of March 31st 2021.
Gogo also announced it has begun a process to refinance and replace its $975 million outstanding 2024 Senior Secured Notes and $30 million undrawn asset-based facility.