GTCR, a leading private equity firm, will convert all of its $105.7 million principal amount of Gogo’s 6.0% Convertible Senior Notes due 2022 into shares of Gogo’s common stock. The deal will see GTCR receive 19.1 million shared of Gogo stock, giving the company a 28.6% ownership stake in Gogo. In addition, on March 30, 2021, Gogo appointed Mark Anderson, Managing Director at GTCR, to the Company’s Board of Directors.
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.– Gogo CEO Oakleigh Thorne
GTCR’s previously took an ~14.8% stake in the company in late 2020. Its sizable position is second only to that of company Chairman and CEO Oakleigh Thorne’s approximately 30% holdings in the company.
Fixing the debt structure
The conversion is just part of Gogo’s efforts to restructure its debt. Gogo also announced today it has begun a process to refinance and replace its $975 million outstanding 2024 Senior Secured Notes and $30 million undrawn asset-based facility. Details on what that refinancing will entail remain unclear, though the company has previously stated expectations of lower rates given the streamlined focus on the business aviation community.
Update (1 April 6:00pm EDT):
In an updated 8-K filing late Thursday Gogo disclosed a new, seven-year term loan of $725 million plus a five-year revolving credit facility. Morgan Stanley Senior Funding, Inc., Credit Suisse AG, Cayman Islands Branch and Deutsche Bank AG New York Branch are facilitating the new funding. Interest rates on the new financing instruments were not disclosed in the filing.
The company commits to using the new loan, plus cash on hand, to cover the outstanding 9.875% secured notes due in 2024. The notes are to be redeemed on 1 May 2021 at 104.938% of the principal amount, plus accrued and unpaid interest.
Original story continues below
Anderson is the ninth member of Gogo’s Board of Directors and arrives with a history of serving on Boards related to GTCR’s investments in the business aviation sector. Not surprisingly, he is optimistic on the company’s future, “Gogo is uniquely positioned to win in the attractive Business Aviation market. Our increased equity investment is a testament to our confidence in the company’s long-term strategic plan and I look forward to collaborating with the rest of the Board as Gogo continues to execute that plan and deliver value.”
Upon completion of the equitization, 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 31, 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 31, 2021, an increase from approximately $435 million reported at the end of 2020 in the company’s 10-K filing.
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