The BlackRock group of funds will grow its financial stake in SmartSky, and also increase its control of the company. In a recent FCC filing related to ground station infrastructure the companies disclosed the transaction, noting “the ability to designate a majority of the members of the Board” for the inflight internet provider.
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A lender typically only exercises control is if there was a loan default. And lenders are not in the business of running companies. They will either try to seek a buyer or liquidate assets to recoup their loan proceeds. either way, it does not bode well for SmartSky.
BlackRock has a history of putting Directors in place, depending on the investment. Taking a majority of the seats is, however, less common.
Black Rock would only convert its debt to equity, transfer the FCC licenses and assert board control if they called the loan. And if SmartSky is under the impression that Black Rock will use its increased equity stake in GoGo to influence a purchase of SmartSky, where is the rationale? SmartSky has an undetermined amount of customers with little market share and a 4G network. Given that GoGo got public funding to rip out its 4G network to comply with recent US policies, why would GoGo purchase a company with a 4G network with an undetermined number of customers that has not been certified as US policy compliant?