In-flight broadband provider Gogo is finally set to go ahead with its initial public offering more than a year and half after first filed to go public.
Gogo stated that it plans to sell approximately 11 million shares at between US$15 and US$17 per…
In-flight broadband provider Gogo is finally set to go ahead with its initial public offering more than a year and half after first filed to go public.
Gogo stated that it plans to sell approximately 11 million shares at between US$15 and US$17 per share raising around US$176m, based on the mid-point of the pricing range.
The underwriters, Morgan Stanley, JP Morgan, UBS (also the joint bookrunners), Allen & Co, Evercore Partners and William Blair, also have an over-allotment of 1.65 million shares that would generate a further US$18.15m.
If the greenshoe is taken up, Gogo will have just over 87.66 million shares of common stock outstanding, meaning that the new issuance represents 14.43% of the enlarged share capital of the company.
A further 12.54 million shares of common stock are being reserved for future equity incentive plans and existing stock options.
The company’s main shareholders, Ripplewood Holdings and Blumenstein/Thorne Information Partners, will continue to retain major stakes in Gogo following its flotation. Assuming the overallotment option is exercised, US private equity firm Ripplewood will reduce its holding from 38% to 31.8% and Thorne, the investment fund of Oakleigh Thorne, will lower its stake from 33.8% to 28.3%. Both companies played a central role in Gogo’s early funding rounds.
Rather that provide an exit for its shareholders, Gogo stated that net proceeds from the IPO would be used for working capital and other general corporate purposes, in particular to help fund its international expansion.
Gogo, which was formerly known as Aircell, has grown rapidly in the past few years by focusing on its air-to-ground (ATG) network over North America. As of 30 April 2013, the company had 1,908 commercial aircraft online, representing approximately 81% of internet-enabled North American commercial aircraft.
In the first quarter of 2012, the company announced plans to expand internationally which meant moving from ATG only services to satellite connectivity. The company has subsequently signed capacity leasing deals with SES, Intelsat and Inmarsat as well as a partnership agreement with equipment provider Aerosat.
Gogo had initially planned to fund this expansion with proceeds from a US$100m IPO that it first filed back in December 2011. However, market turbulence led to the company putting the listing on hold and focusing instead on raising money via a debt financing.
It subsequently raised US$135m via Morgan Stanley and JP Morgan in mid-2012 and in April this year closed a US$113m add-on to that facility.
The company specifically stated in its latest IPO filing that net proceeds would not be used to repay any of its existing long-term debt and instead would help pay for the costs of its international expansion. This includes certain costs associated with satellite or other technologies, such as costs incurred to develop and implement changes to ground and airborne software and hardware and the cost of obtaining satellite capacity.
In addition, the company expects increased costs related to the additional legal and regulatory expenses associated with operating in the international commercial aviation market.
On 14 May 2013, Gogo announced that the FCC had granted it a blanket licence to operate up to 1,000 Ku-band satellite aircraft for international and domestic service.
The license was granted based on Gogo’s leasing deals with SES and Intelsat. Under its agreement with the former, Gogo will utilize capacity on the SES-1, NSS-703 and SES-4 satellites, covering the continental US, North Atlantic and Europe. Following SES-6’s recent successful launch, the Gogo service via NSS-703 will be transitioned onto the new spacecraft in mid-2014.
Under its agreement with Intelsat, Gogo has access to the Intelsat-19, Intelsat-21 and Intelsat-22 satellites. Gogo said it would use these birds to provide connectivity for air passengers crossing portions of the Atlantic and northern Pacific oceans, as well as routes over South America, Asia, Africa and Australia.
Gogo also has an agreement in place with Inmarsat, to offer airlines a global Ka-band satellite solution via Inmarsat’s Global Xpress service when it becomes available in 2015.
