CHICAGO, Dec. 6, 2018 /PRNewswire/ -- Gogo Inc.
(NASDAQ: GOGO), the leading global provider of broadband
connectivity products and services for aviation, today announced
the closing of its approximately $238
million offering of 6.00% convertible senior notes due in
May 2022.
Under the terms of the transaction, Gogo effectively extended
the maturity of approximately $200
million of its outstanding convertible senior notes from
March 2020 until May 2022. Approximately $162 million in convertible senior notes due 2020
remain outstanding.
In connection with the transaction, the Company's gross debt
increased by approximately $38
million, offset by an approximately $28 million increase in cash on the balance sheet
after the execution of the greenshoe, which closed on December 5, 2018. An entity affiliated with
Oakleigh Thorne, President and CEO
of Gogo, also purchased $8 million of
the new 2022 convertible senior notes in a concurrent private
placement.
"Over the past several months, we have been pursuing a range of
solutions to address our balance sheet before the 2020 convertible
senior notes become current in March of 2019," Mr. Thorne said. "We
believe this transaction strengthens Gogo's position as we continue
to evaluate both strategic and financial options to maximize
shareholder value."
Gogo also provided additional background and rationale for the
transaction:
- The Company considered various refinancing alternatives before
selecting this transaction, and it believes that refinancing
approximately $200 million of the
2020 convertible senior notes strikes the right balance of
mitigating dilution while managing risk.
- This transaction was impacted by the sale of nearly 5.7 million
shares of the Company's common stock by a significant shareholder
on the day the Company priced the 2022 convertible senior notes,
and a challenging market environment for technology stocks at the
time of the transaction.
- Gogo chose to refinance a portion of the 2020 convertible
senior notes at this time because the Company:
- Believes that completing the sale of approximately $238 million of 2022 convertible senior notes
demonstrates its access to capital markets;
- Believes that refinancing the entire $362 million aggregate principal amount of 2020
convertible senior notes would have resulted in excessive dilution;
and
- Is confident in the performance of its business and believes
the Company should be able to refinance the remaining approximately
$162 million aggregate principal
amount of 2020 convertible senior notes at a later date on a less
dilutive basis.
- In addition to refinancing the remaining $162 million of 2020 senior convertible notes,
the Company believes it will be well-positioned to refinance its
$690 million of outstanding senior
secured notes due 2022, which are callable in July 2019, at an interest rate lower than its
current 12.5% coupon.
Forward-Looking Statements
This press release includes
forward-looking statements regarding the Company's financing plans,
including statements related to the Company's intended use of net
proceeds from the sale of the 2022 Convertible Senior Notes. Such
statements, as well as the Company's future financial condition and
future results of operations, are subject to certain risks and
uncertainties including, without limitation, market and other
general economic conditions; the portion of the net proceeds from
the sale of the 2022 Convertible Senior Notes reserved to fund
future interest payments on the 2022 Convertible Senior Notes,
together with funds upstreamed from the Company's subsidiaries and
from other potential sources of liquidity (if any), not being
adequate to fund any future liquidity shortfall; the loss of, or
failure to realize benefits from, agreements with the Company's
airline partners or customers or any failure to renew any existing
agreements upon expiration or termination; the failure to maintain
airline and passenger satisfaction with the Company's equipment or
the Company's service; any inability to timely and efficiently
deploy the Company's 2Ku service or develop and deploy the
technology to which the Company's ATG network evolves or other
components of the Company's technology roadmap for any reason,
including technological issues and related remediation efforts,
changes in regulations or regulatory delays or failures affecting
the Company or the Company's suppliers, some of whom are single
source, or the failure by the Company's airline partners or
customers to roll out equipment upgrades or new services or adopt
new technologies in order to support increased network capacity
demands; the timing of deinstallation of the Company's equipment
from aircraft, including deinstallations resulting from aircraft
retirements and other deinstallations permitted by certain airline
contract provisions; the loss of relationships with original
equipment manufacturers or dealers; the Company's ability to make
its equipment factory line-fit available on a timely basis; the
Company's ability to develop or purchase ATG and satellite network
capacity sufficient to accommodate current and expected growth in
passenger demand in North America
and internationally as it expands; the Company's reliance on
third-party suppliers, some of whom are single source, for
satellite capacity and other services and the equipment the Company
uses to provide services to commercial airlines and their
passengers and business aviation customers; unfavorable economic
conditions in the airline industry and/or the economy as a whole;
the Company's ability to expand its international or domestic
operations, including the Company's ability to grow its business
with current and potential future airline partners and customers
and the effect of shifts in business models; an inability to
compete effectively with other current or future providers of
in-flight connectivity services and other products and services
that the Company offers, including on the basis of price, service
performance and line-fit availability; the Company's ability to
successfully develop and monetize new products and services such as
Gogo Vision and Gogo TV, including those that were recently
released, are currently being offered on a limited or trial basis,
or are in various stages of development; the Company's ability to
certify and install its equipment and deliver its products and
services, including newly developed products and services, on
schedules consistent with its contractual commitments to customers;
the failure of the Company's equipment or material defects or
errors in its software resulting in recalls or substantial warranty
claims; a revocation of, or reduction in, the Company's right to
use licensed spectrum, the availability of other air-to-ground
spectrum to a competitor or the repurposing by a competitor of
other spectrum for air-to-ground use; the Company's use of open
source software and licenses; the effects of service interruptions
or delays, technology failures and equipment failures or
malfunctions arising from defects or errors in the Company's
software or defects in or damage to its equipment; the limited
operating history of the Company's CA-ROW segment; contract changes
and implementation issues resulting from decisions by airlines to
transition from the turnkey model to the airline-directed model;
increases in the Company's projected capital expenditures due to,
among other things, unexpected costs incurred in connection with
the roll-out of its technology roadmap or its international
expansion; compliance with U.S. and foreign government regulations
and standards, including those related to regulation of the
Internet, including e-commerce or online video distribution
changes, and the installation and operation of satellite equipment
and the Company's ability to obtain and maintain all necessary
regulatory approvals to install and operate its equipment in
the United States and foreign
jurisdictions; the Company's, or its technology suppliers',
inability to effectively innovate; changes as a result of U.S.
federal tax reform; costs associated with defending pending or
future intellectual property infringement, securities and
derivative litigation and other litigation or claims and any
negative outcome or effect of pending or future litigation; the
Company's ability to protect its intellectual property; breaches of
the security of the Company's information technology network,
resulting in unauthorized access to its customers' credit card
information or other personal information; the Company's
substantial indebtedness; limitations and restrictions in the
agreements governing the Company's indebtedness and its ability to
service its indebtedness; the Company's ability to obtain
additional financing for operations, or financing intended to
refinance its existing indebtedness, on acceptable terms or at all;
fluctuations in the Company's operating results; the Company's
ability to attract and retain customers and to capitalize on
revenue from its platform; the demand for and market acceptance of
the Company's products and services; changes or developments in the
regulations that apply to the Company, its business and its
industry, including changes or developments affecting the ability
of passengers or airlines to use its in-flight connectivity
services, including the recent U.S. and U.K. bans on the use of
certain personal devices such as laptops and tablets on certain
aircraft flying certain routes; a future act or threat of
terrorism, cyber-security attack or other events that could result
in adverse regulatory changes or developments as referenced above,
or otherwise adversely affect the Company's business and industry;
the Company's ability to attract and retain qualified employees,
including key personnel; the effectiveness of the Company's
marketing and advertising and its ability to maintain and enhance
its brands; the Company's ability to manage its growth in a
cost-effective manner and integrate and manage acquisitions;
compliance with anti-corruption laws and regulations in the
jurisdictions in which it operates, including the Foreign Corrupt
Practices Act and the (U.K.) Bribery Act 2010; restrictions on the
ability of U.S. companies to do business in foreign countries,
including, among others, restrictions imposed by the U.S. Office of
Foreign Assets Control; difficulties in collecting accounts
receivable; and the Company's ability to successfully implement its
new enterprise resource planning system, its new integrated
business plan and other improvements to systems, operations,
strategy and procedures needed to support its growth.
The Company's forward-looking statements also involve
assumptions that, if they never materialize or prove correct, could
cause its results to differ materially from those expressed or
implied by such forward-looking statements. These and other risks
concerning the Company and its businesses are described in
additional detail in its Annual Report on Form 10-K for the year
ended December 31, 2017, its
Quarterly Reports on Form 10-Q for the quarters ending March 31, 2018 and June
30, 2018 and other filings made by the Company which are on
file with the Securities and Exchange Commission.
Any one of these factors or a combination of these factors could
materially affect the Company's financial condition or future
results of operations and could influence whether any
forward-looking statements contained in this press release
ultimately prove to be accurate. the Company's forward-looking
statements are not guarantees of future performance, and you should
not place undue reliance on them. All forward-looking statements
speak only as of the date made and the Company undertakes no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
About the Company:
Gogo is the Inflight Internet
Company. We are the leading global provider of broadband
connectivity products and services for aviation. We design and
source innovative network solutions that connect aircraft to the
Internet, and develop software and platforms that enable
customizable solutions for and by our aviation partners. Once
connected, we provide industry leading reliability around the
world. You can find Gogo's products and services on thousands
of aircraft operated by the leading global commercial airlines and
thousands of private aircraft, including those of the largest
fractional ownership operators. Gogo is headquartered in
Chicago, IL with additional
facilities in Broomfield, CO and
locations across the globe. Connect with us at gogoair.com.
Investor Relations
Contact:
|
Media Relations
Contact:
|
William
Davis
|
Meredith
Payette
|
+1
312-517-5725
|
+1
312-517-6216
|
ir@gogoair.com
|
pr@gogoair.com
|
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SOURCE Gogo Inc.