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Morgan Stanley, Credit Suisse, Others Arrange Refinance Facility for Gogo

April 22, 2021, 08:00 AM
Filed Under: Technology

Gogo announced the pricing and allocation of a 7-year $725 million term loan B (the "Term Loan B") and a 5-year $100 million revolving credit facility (the "Revolver" and together with the Term Loan B, the "Facilities"), marking an important milestone in its comprehensive refinancing efforts. Gogo expects that the Term Loan B will bear interest at LIBOR (with a LIBOR floor of 0.75%) plus 3.75% and be offered at 99.5% of par (or with an original issue discount of 0.5%). Morgan Stanley, Credit Suisse, Deutsche Bank, Benefit Street Partners and CBAM Partners acted as Joint Lead arrangers. Morgan Stanley is also administrative agent on the term loan.

Gogo intends to use the proceeds of the Term Loan B and cash on hand to redeem in full the $975 million aggregate principal outstanding of its Senior Secured Notes due 2024 (the "Senior Secured Notes"). The new 5-year $100 million Revolver, which will replace Gogo's existing asset based revolving credit facility, will provide additional liquidity. In addition to reducing overall leverage, Gogo expects to realize approximately $70 million in annual interest expense savings as a result of the Facilities. The closing of the Facilities, which is expected to occur in late April, is subject to execution of definitive documentation.

"In early 2020, Gogo outlined our value-creation roadmap focused on three key priorities: managing our business through the severe impact of the COVID-19 pandemic on the travel industry, completing the sale of the Commercial Aviation business, and executing a comprehensive refinancing to enhance our financial flexibility and position Gogo for growth," said Oakleigh Thorne, Gogo's Chairman and CEO. "With today's announcement, we have delivered on that plan, and are well-positioned to build on our enhanced financial profile and strong market position to drive long-term shareholder value."

"We are pleased by the strong receptivity to Gogo as reflected by the significant excess demand for the transaction, and we deeply appreciate the partnership of the many high-quality lenders that have expressed interest in participating," added Barry Rowan, Gogo's Chief Financial Officer. "This comprehensive refinancing will further the transformation of our financial profile, strengthening our capital structure, improving our cash flow and creating tremendous opportunity for Gogo to deliver on the full value-creation potential of our unmatched platform in the attractive Business Aviation market."

Gogo received corporate ratings of B3 and B- from Moody's Investors Service and S&P Global Ratings, respectively, with a stable outlook from both agencies. As of April 20, 2021, Gogo had $464 million cash on hand. Following the closing of the Facilities, and subsequent payment of the outstanding principal amount of the Senior Secured Notes, redemption premium and accrued interest, and transaction fees and expenses, Gogo expects to have approximately $70 million of cash on its balance sheet. Gogo does not expect to draw on the Revolver at closing.

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