In-flight broadband provider Gogo has raised US$340m through the issuance of convertible senior notes due 2020 in a private placement.
Gogo initially announced plans to sell US$300m of the notes but with a 30-day overallotment option to purchase up to…
In-flight broadband provider Gogo has raised US$340m through the issuance of convertible senior notes due 2020 in a private placement.
Gogo initially announced plans to sell US$300m of the notes but with a 30-day overallotment option to purchase up to an additional US$45m.
The notes, which bear interest at a rate of 3.75% per year, will be convertible after 1 December 2019 and will be settled in shares of Gogo’s common stock.
In certain circumstances, the notes may be converted prior to that date at an initial conversion price of approximately US$23.85 per share of Gogo’s common stock, representing a 22.50% conversion premium over the stock’s closing price of US$19.47 per share on 3 March 2015.
In connection with the offering, the company entered into privately negotiated forward stock purchase transactions with certain of the initial purchasers of the notes. Gogo has agreed to acquire approximately 7.19 million shares of common stock, subject to adjustment, for settlement early in 2020.
The forward stock purchase transactions are expected to facilitate privately negotiated derivative transactions between the forward counterparties and holders of the notes, enabling the latter to establish short positions on the stock to hedge their investments in the notes.
Gogo estimates that net proceeds will be around US$329m, of which it expects to use US$140m to fund the cost of repurchasing shares under the forward stock purchase transactions. The remainder will be used for general corporate purposes, including costs associated with developing and launching its next-generation technology solutions and the acquisition of additional spectrum should it become available.
Gogo recently reported its full year 2014 results, recording a 24% year-on-year rise in revenue to US$408.5m. This was predominantly driven by substantial growth in its commercial aviation – North America and business aviation segments, which reported an 80% year-on-year rise in profits.
Overall adjusted EBITDA was US$10.8m, up 29% from 2013. The company said that this reflects the investments it is making to grow its commercial aviation – Rest of World business.
In December 2014, Gogo signed a definitive agreement with Virgin Atlantic Airlines to provide internet connectivity using its Ku-band satellite solution, 2Ku.
