US in-flight broadband and content provider Global Eagle Entertainment plans to issue US$75m in convertible senior notes for possible acquisitions and other general corporate purposes.
The senior unsecured bond due 2035, which could also be used for new…
US in-flight broadband and content provider Global Eagle Entertainment plans to issue US$75m in convertible senior notes for possible acquisitions and other general corporate purposes.
The senior unsecured bond due 2035, which could also be used for new product investments and costs associated with expanding in emerging markets, will be convertible into cash, shares, or a combination of the two.
The company also expects to grant initial purchasers a 30-day option to buy up to US$7.5m additional aggregate principal amount of the notes in its private placement.
GEE is known for being acquisitive and interested in expanding inorganically, although its prospectus said there were no deals in the pipeline. The prospectus also said it expects to achieve US$96.3m-101.3m in Q4 2014 revenues and US$9.3m-11.1m in EBITDA.
“The Q4 results were basically inline, but the convert is a bit of a surprise,” said Wells Fargo analyst Andrew Spinola.
“[GEE] exited Q3 with cash of US$210m and US$3m of debt. It’s unclear to us why [GEE] wants the additional capital. The cash balance is strong and the business to date is capx light and should be FCF positive in 2015 by our estimates.”
Concurrently with the bond offering, certain members of GEE’s board have hired Piper Jaffray & Co. and Macquarie Capital as joint book-running managers to sell 8.3 million common shares in an underwritten public offering.
GEE said all of the sellers were either its founders or original investors in satellite-based in-flight broadband service provider Row 44 and German in-flight entertainment solutions firm AIA, which it bought in early 2013 for around US$430m.
“The shares being sold in this offering represent only a portion of the shareholdings of the sellers who, in aggregate, will retain a significant stake in GEE after this sale,” it said in an SEC filing.
It also said an additional 1.245 million shares will be made available to cover any over allotments, and that the company will not receive any proceeds from the common stock offering.
The move comes not long after GEE founders Harry Sloan and Jeff Sagansky announced plans to buy a stake of up to 38.6% in Videocon d2h, the Indian satellite television broadcaster.