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Gogo Announces Closing of $238 Million Convertible Notes Offering


Dec. 6, 2018

Gogo Inc. 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.

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