Airplane wi-fi provider Gogo today announced that it will be unwinding the sale of a $525 million issue of 12% secured notes due 2022 from earlier this week ahead of settlement today because it “received a proposal from a major airline customer under which Gogo would provide connectivity service on a meaningful portion of the airline’s domestic fleet,” according to a company statement.
All trades will have to be unwound for the paper, including 101.5 and 101.75 most recently and that context generally all week, from quotes of 101/101.5 on the break late on Monday, versus par issuance. As reported, joint bookrunners on the B–/B2 transaction were Morgan Stanley, J.P. Morgan, and Bank of America, with co-managers Evercore and UBS.
This is a rare pre-settlement move by an issuer not seen since Legends Gaming backed out of its placement in late 2007 andCablevision iced an offering after cancelling a dividend back in 2005. Of course, there were unwinds more recently, but related to failed M&A, like Charter and Dish in recent years.
Proceeds from the 144A-for-life deal from Gogo were to be used to pay down all of the company’s term debt, which was roughly $288 million at the end of the first quarter, and additional proceeds will be used to support working capital and for general corporate purposes, including the roll-out of next-generation product and technology.
Details of the airline-deal arrangement remain subject to negotiation, but the bonds will nonetheless not close for settlement today, the company said.
Gogo is Nasdaq-listed, but recall that TCP Capital expanded its investment in the company a year ago through the addition of a $15 million senior secured loan in the first quarter. See “TCP Capital adds more first-lien debt to Gogo in Q1,” LCD News, May 26, 2015. TCP Capital is a BDC that invests in middle market companies.
Chicago-based Gogo provides communications services to commercial and business aviation through strategic alliances with satellite operators, and it’s currently carrying an approximate $820 million market capitalization. Trailing 12-month net revenues of around $527 million boiled down to roughly $49 million in EBITDA, according to S&P Global Market Intelligence. — Matt Fuller
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