Gogo notified debtors of its intention to pay off $100 million of outstanding debt, a move that will help the company reduce its long-term interest expenses. The payment is expected to clear on Wednesday, May 3, 2023.
As we execute on our strategy and deliver significant free cash flow growth in line with our long-term guidance, Gogo will continue to pursue a balanced capital allocation strategy focused on maintaining adequate liquidity, investing in strategic initiatives like Gogo 5G and our LEO-based Global Broadband product, maintaining an amount of leverage appropriate for the economic environment, and enhancing shareholder value.
– Gogo CEO Oakleigh Thorne
With the move, Gogo’s Term Loan B debt will reduce to $612.3 million. There is no prepayment penalty for this transaction.
Interest expense will drop by approximately $4.5 million for 2023 and an estimated $8.5 million annually going forward. The impacted debt was initially signed for $725 million in April 2021, on a 7-year term. That refinancing plan retired the prior obligations and reduced annual interest expense by approximately $70 million.
In 2021 the loan priced at LIBOR + 3.75% and in April 2021 would have been paid at the floor rate of 4.5%. Today the company would pay around 8% based on current LIBOR rates.
The company reported cash on hand of $188 million prior to the transaction, plus full access to its $100 million revolver credit facility.
Separately, the company also reported Q1 earnings with total revenue of $98.5 million. This includes record service revenue for the quarter of $78.5 million and 7.046 aircraft online.
There’s more to the story…Dig deeper with a PaxEx.Aero Premium Subscription
A favor to ask while you're here...
Did you enjoy the content? Or learn something useful? Or generally just think this is the type of story you'd like to see more of? Consider supporting the site through a donation (any amount helps). It helps keep me independent and avoiding the credit card schlock.
Leave a Reply