Global Eagle Receives Court Approval for “First Day” Motions to Support Business Operations
July 24 2020 - 8:30AM
Global Eagle Entertainment Inc. (Nasdaq: ENT) (“Global Eagle”
or the “Company”), a leading provider of media, content,
connectivity and data analytics to mobility end-markets across air,
sea and land, today announced that it has received interim
approvals from the U.S. Bankruptcy Court for the District of
Delaware for the “First Day” motions related to the Company’s
voluntary Chapter 11 petitions filed on July 22, 2020. These
approvals will help ensure that the Company’s day-to-day operations
continue without interruption during the court-supervised process.
As previously announced, the Company intends to use this process to
facilitate the proposed sale of the business to an investor group
comprising approximately 90% of Global Eagle’s first-lien term loan
holders. This sale is subject to Court approval pursuant to Section
363 of the U.S. Bankruptcy Code and other conditions.
“We appreciate the Court’s swift approval of our
First Day motions, which will enable us to continue operating and
serving customers in the ordinary course as we work to implement
the sale of the business,” said Joshua Marks, Chief Executive
Officer of Global Eagle. “The support from the investor group is a
testament to their confidence in our business, our team and our
future. As we move through this process, we remain focused on
supporting our customers through the challenging COVID-19
environment and helping them plan for the recovery and beyond. I
would also like to thank our employees for their continued
dedication to our company, and our customers, vendors and suppliers
for their continued partnership.”
Among other approvals, the Court granted interim
approval for Global Eagle to access $30 million of the $80 million
in debtor-in-possession (“DIP”) financing the Company obtained from
the investor group. This new financing, together with cash on hand
and cash generated from ongoing operations, is expected to provide
ample liquidity to support Global Eagle’s operations during the
sale process. In addition, the Court authorized the Company to
continue payment of employee wages, salaries and benefits, and to
pay vendors, suppliers and other partners to its affected U.S.
subsidiaries in full under normal terms for goods and services
provided on or after the filing date of July 22, 2020.
Global Eagle’s non-U.S. subsidiaries are not
included in the Chapter 11 proceedings, and suppliers to those
entities will continue to be paid in the ordinary course,
regardless of when goods or services were delivered.
Additional information regarding Global Eagle’s
restructuring and sale process is available at
www.ConnectWithGlobalEagle.com. Court filings and other information
related to the proceedings are available on a separate website
administrated by the Company’s claims agent, Prime Clerk, at
https://cases.primeclerk.com/GEE, by calling Prime Clerk toll-free
at 877-930-4318 (or 347-897-4054 for calls originating outside of
the U.S.) or by sending an email to GEEinfo@primeclerk.com.
Latham & Watkins LLP is serving as the
Company’s legal counsel. Greenhill & Co., Inc. is serving as
the Company’s financial advisor and Alvarez & Marsal is serving
as the Company’s restructuring advisor.
About Global EagleGlobal Eagle
is a leading provider of media, content, connectivity and data
analytics to markets across air, sea and land. Global Eagle offers
a fully integrated suite of rich media content and seamless
connectivity solutions to airlines, cruise lines, commercial ships,
high-end yachts, ferries and land locations worldwide. With
approximately 1,100 employees and 30 offices on six continents, the
Company delivers exceptional service and rapid support to a diverse
customer base. Find out more at: www.GlobalEagle.com.
Contacts:InvestorsPeter A.
LopezVice President, Finance and Investor Relations+1
310-740-8624investor.relations@GlobalEagle.com
MediaMichael Freitag / Aura
ReinhardJoele Frank, Wilkinson Brimmer Katcher+1 212-355-4449
Forward-Looking
StatementsCertain statements in this press release may
constitute “forward-looking” statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, without limitation, the impact
of our filing for bankruptcy protection under Chapter 11, our
proposed restructuring activities and proposed asset sale,
operating-expense and cost structure improvements and reductions
and our ability to execute and realize the benefits of the proposed
restructuring and proposed asset sale, our cost-savings plans,
financial covenant compliance, margins, profitability, future
efficiencies, liquidity, ability to generate positive cash flow
from operating activities, and other financial and operating
information. The words “anticipate,” “assume,” “believe,” “budget,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“potential,” “predict,” “project,” “should,” “will,” “future” and
the negative of these or similar terms and phrases are intended to
identify forward-looking statements in this press release.
Forward-looking statements reflect our current
expectations regarding future events, results or outcomes. These
expectations may or may not be realized. Although we believe the
expectations reflected in the forward-looking statements are
reasonable, we can give you no assurance these expectations will
prove to have been correct. Some of these expectations may be based
upon assumptions, data or judgments that prove to be incorrect.
Actual events, results and outcomes may differ materially from our
expectations due to a variety of known and unknown risks,
uncertainties and other factors. Although it is not possible to
identify all of these risks and factors, they include, among
others, the following:
- the impact of our bankruptcy filing on our relationships with
customers, investors, employees, advisors and vendors;
- the effect that the rapid spread of contagious illnesses, such
as the coronavirus, is and could continue to have on our business
and results of operations;
- our ability to successfully pursue and consummate financing,
recapitalization, strategic transactions (including the proposed
asset sale) and other similar transactions to address the
substantial doubt about the company’s ability to continue as a
going concern;
- our ability to satisfy the conditions to closing the proposed
restructuring and proposed asset sale, including our ability to
obtain requisite approvals from the federal bankruptcy court and
3rd parties;
- our ability to anticipate and keep pace with rapid changes in
customer needs and technology;
- negative external perceptions that damage our reputation among
potential customers, investors, employees, advisors and
vendors;
- service interruptions or delays, technology failures, damage to
equipment or software defects or errors and the resulting impact on
our reputation and ability to attract, retain and serve our
customers;
- the effect of cybersecurity attacks, data or privacy breaches,
data or privacy theft, unauthorized access to our internal systems
or connectivity or media and content systems, or phishing or
hacking, on our business, our relationships with customers, vendors
and our reputation;
- our ability to timely remediate material weaknesses in our
internal control over financial reporting; the effect of those
weaknesses on our ability to report and forecast our operations and
financial performance;
- the impact of our remediation efforts (and associated
management time and costs) on our liquidity and financial
performance;
- our ability to maintain effective disclosure controls and
internal control over financial reporting;
- our ability to execute on our operating-expense and
cost-structure realignment plan and realize the benefits of those
initiatives;
- our dependence on the travel industry;
- our ability to expand our international operations and the
risks inherent in our international operations, especially in light
of current and future trade and national-security disputes;
- our ability to plan expenses and forecast revenue due to the
long sales cycle of many of our Media & Content segment’s
products;
- our dependence on our existing relationship and agreement with
Southwest Airlines;
- the timing and conditions surrounding the return to normal
production and revenue service of the Boeing 737 MAX aircraft;
- our ability to develop new products or services or enhance
those we currently provide in our Media & Content segment;
- our ability to accelerate dividends from, or dispose of our 49%
interest in, Wireless Maritime Services, LLC (“WMS”);
- our ability to integrate businesses or technologies we have
acquired or may acquire in the future;
- our ability to successfully divest or dispose of business that
are deemed not to fit with our strategic plan;
- the effect of future acts or threats of terrorism, threats to
national security and other actual or potential conflicts, wars,
geopolitical disputes or similar events on the use of Wi-Fi enabled
devices on our aircraft and maritime vessels;
- the effect of natural disasters, adverse weather conditions or
other environmental incidents on our business;
- the possibility that our insurance policies may not fully cover
all loses we incur;
- our ability to obtain new customers and renew agreements with
existing customers;
- our customers’ solvency, inability to pay and/or delays in
paying us for our services, and potential claims related to
payments from customers received prior to such customers’
insolvency proceedings;
- our ability to retain and effectively integrate and train key
members of senior management;
- our ability to recruit, train and retain highly skilled
technical employees;
- our ability to receive the anticipated cash distributions or
other benefits from our investment in the WMS joint venture;
- the effect of a variety of complex U.S. and foreign tax laws
and regimes due to the global nature of our business;
- our ability to utilize our net operating loss carryforwards and
certain other tax attributes may be limited;
- our ability to continue to be able to make claims for
e-business and multimedia tax credits in Canada;
- our exposure to interest rate and foreign currency risks;
- the effect of political changes and developments globally,
including Brexit, on our customers and our business;
- our need to invest in and develop new broadband technologies
and advanced communications and secure networking systems, products
and services and antenna technologies as well as their market
acceptance;
- increased demand by customers for greater bandwidth, speed and
performance and increased competition from new technologies and
market entrants;
- customer attrition due to direct arrangements between satellite
providers and customers;
- our reliance on “sole source” service providers and other third
parties for key components and services that are integral to our
product and service offerings;
- the potential need to materially increase our investments in
product development and equipment beyond our current investment
expectations;
- equipment failures or software defects or errors that may
damage our reputation or result in claims in excess of our
insurance or warranty coverage;
- satellite failures or degradations in satellite
performance;
- our use of fixed-price contracts for satellite bandwidth and
potential cost differentials that may lead to losses if the market
price for our services declines relative to our committed
cost;
- our ability to plan expenses and forecast revenue due to the
long sales cycle of many of our Connectivity segment’s
products;
- increased on-board use of personal electronic devices and
content accessed and downloaded prior to travel which may cause
airlines to reduce investment in seatback entertainment
systems;
- increased competition in the in-flight entertainment and
in-flight connectivity system supply chain;
- pricing pressure from suppliers and customers in our Media
& Content segment and a reduction in the aviation industry’s
use of intermediary content service providers (such as us);
- a reduction in the volume or quality of content produced by
studios, distributors or other content providers or their refusal
to license content or other rights upon terms acceptable to
us;
- a reduction or elimination of the time between our receipt of
content and it being made available to the rental or home viewing
market (i.e., the “early release window”);
- the refusal of content providers to license content to us,
operational complexity and increased costs or reducing content that
we offer due to challenges maintaining and tracking our music
content licenses and rights related thereto, which could cause a
decline in customer retention or inability to win new business; our
use of fixed-price contracts in our Media & Content segment
that may lead to losses in the future if the market price for our
services declines relative to our committed cost;
- our ability to successfully implement a new enterprise resource
planning system;
- our ability to protect our intellectual property;
- the effect on our business and customers due to disruption of
the technology systems utilized in our business operations;
- the costs to defend and/or settle current and potential future
civil intellectual property lawsuits (including relating to music
and other content infringement) and related claims for
indemnification;
- changes in regulations and our ability to obtain regulatory
approvals to provide our services or to operate our business in
particular countries or territorial waters;
- compliance with U.S. and foreign regulatory agencies, including
the Federal Aviation Administration, the U.S. Department of
Treasury’s Office of Foreign Asset Control, Federal Communications
Commission, and Federal Trade Commission and their foreign
equivalents in the jurisdictions in which we and our customers
operate;
- regulation by foreign government agencies that increases our
costs of providing services or requires us to change services;
- changes in government regulation of the Internet, including
e-commerce or online video distribution;
- our ability to comply with trade, export, anti-money laundering
and anti-bribery practices and data protection laws, especially the
U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, the
General Data Protection Regulation and the California Consumer
Privacy Act;
- changes in foreign and domestic civil aviation authorities’
orders, airworthiness directives, or other regulations that
restrict our customers’ ability to operate aircraft on which we
provide services;
- our (along with our directors’ and officers’) exposure to civil
stockholder litigation relating to our investor disclosures and the
related costs of defending and insuring against such
litigation;
- uninsured or underinsured costs associated with stockholder
litigation and any uninsured or underinsured indemnification
obligations with respect to current and former executive officers
and directors;
- limitations on our cash flow available to make investments due
to our substantial indebtedness and covenants set forth in our debt
agreements, including a maximum consolidated first lien net
leverage ratio covenant and a minimum liquidity covenant, and our
ability to generate sufficient cash flow to make principal and
interest payments thereon, comply with our reporting and financial
covenants, or fund our operations;
- our ability to repay the principal amount of our bank debt,
including any debtor-in-possession financing and any related
financings, second lien notes due June 30, 2023 (the “Second Lien
Notes”) and/or 2.75% convertible senior notes due 2035 (the
“Convertible Notes”) at maturity or upon acceleration thereof, to
raise the funds necessary to settle conversions of our Convertible
Notes or to repurchase our Convertible Notes upon a fundamental
change or on specified repurchase dates or due to future
indebtedness;
- the negative impact of our proposed restructuring activities
and proposed asset sale on the holders of our outstanding common
stock or Convertible Notes, who are not expected to receive any
consideration as a result of such transactions;
- the conditional conversion of our Convertible Notes;
- the effect on our reported financial results of the accounting
method for our Convertible Notes;
- the impact of the fundamental change repurchase feature and
change of control repurchase feature of the securities purchase
agreement governing our Second Lien Notes on our price or potential
as a takeover target;
- the effect of the downgrade of our credit rating on our
business, reputation and ability to raise capital;
- our potential as a takeover target due to price depression of
our common stock;
- the dilution or price depression of our common stock that may
occur as a result of the conversion of our Convertible Notes and/or
Searchlight warrants;
- conflicts between our interests and the interests of our
largest stockholders;
- volatility of the market price of our securities;
- anti-takeover provisions contained in our charter and bylaws
and our Shareholder Rights Plan;
- the dilution of our common stock if we issue additional equity
or convertible debt securities;
- the possibility that we may experience delays in filing our
periodic SEC reports due to our material weaknesses in our internal
control over financial reporting;
- additional losses due to further impairment in the carrying
value of our goodwill;
- changes in accounting standards, including the new credit loss
standards; and
- other risks and factors listed under “Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2019 and
the Quarterly Report on Form 10-Q for the three months ended March
31, 2020.
The forward-looking statements herein speak only
as of the date the statements are made as of the filing date of
this press release. You should not put undue reliance on any
forward-looking statements. We assume no obligation to update
forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities
laws. If we do update one or more forward-looking statements, no
inference should be drawn that we will make additional updates with
respect to those or other forward-looking statements.
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