UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 20, 2017
GOGO INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35975 | 27-1650905 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 111 North Canal, Suite 1500 Chicago, IL |
60606 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 312-517-5000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 8.01 | OTHER EVENTS |
On September 20, 2017, Gogo Inc. issued a press release announcing that Gogo Intermediate Holdings LLC, a direct wholly-owned subsidiary of Gogo Inc. (“Intermediate Holdings”), and Gogo Finance Co. Inc., a direct wholly-owned subsidiary of Intermediate Holdings and an indirect wholly-owned subsidiary of Gogo Inc., have commenced an offering of additional 12.500% Senior Secured Notes due 2022 (the “Additional Notes”) in transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). The Issuers’ previously issued 12.500% Senior Secured Notes due 2022 in an aggregate principal amount of $525 million on June 14, 2016 and in an aggregate principal amount of $65 million on January 3, 2017.
A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.
In connection with the above mentioned offering of the Additional Notes, the information set forth in the presentation attached hereto as Exhibit 99.2 will be used by management of Gogo Inc.
This report does not constitute an offer to sell or a solicitation of an offer to buy the Additional Notes. The Additional Notes have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
| Item 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Press Release of Gogo Inc., dated September 20, 2017 | |
| 99.2 | Investor Presentation | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GOGO INC. | ||
| By: | /s/ Barry Rowan | |
| Barry Rowan Executive Vice President and Chief Financial Officer | ||
Date: September 20, 2017
Exhibit 99.1
| Investor Relations Contact: |
Media Relations Contact: | |||
| Varvara Alva |
Steve Nolan | |||
| 312-517-6460 |
312-517-6074 | |||
| ir@gogoair.com |
pr@gogoair.com |
Gogo Inc. Announces Launch of $100 Million Senior Secured Notes Offering
Chicago, IL, September 20, 2017 – Gogo Inc. (“Gogo”) (NASDAQ:GOGO) announced the commencement of a private offering of $100 million aggregate principal amount of additional 12.500% senior secured notes due 2022 (the “Additional Notes”) to be issued by its direct wholly owned subsidiary, Gogo Intermediate Holdings LLC (the “Issuer”), and its indirect wholly owned subsidiary, Gogo Finance Co. Inc. (the “Co-Issuer” and, together with the Issuer, the “Issuers”). The Issuers’ 12.500% Senior Secured Notes due 2022 were previously issued in an aggregate principal amount of $525 million on June 14, 2016 and in an aggregate principal amount of $65 million on January 3, 2017 (collectively, the “Previously Issued Notes”). The Additional Notes and the Previously Issued Notes will be treated as the same series for all purposes under the indenture and collateral agreements, each as amended and supplemented, that govern the Initial Notes and will govern the Additional Notes. The Additional Notes will be guaranteed on a senior secured basis by Gogo and all of the existing and future domestic restricted subsidiaries of the Issuer (other than the Co-Issuer), subject to certain exceptions (the “Guarantors”). The Additional Notes and the related guarantees will be secured by first priority liens on substantially all of the Issuers’ and the Guarantors’ assets, including pledged equity interests of the Issuers and the Guarantors. There can be no assurance that the proposed offering of Additional Notes will be completed.
The Issuer intends to use the net proceeds from the sale of the Additional Notes to accelerate the commercial rollout of Gogo’s next-generation global satellite solution, 2Ku, for working capital and other general corporate purposes.
The Additional Notes and the guarantees will be offered in a private offering exempt from the registration requirements of the United States Securities Act of 1933, as amended (the “Securities Act”). The Additional Notes and the guarantees will be offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act.
The consummation of the offering of the Additional Notes will be conditioned upon, among other things, satisfaction or waiver of the conditions to the previously announced consent solicitation with respect to the Notes, including obtaining the valid and unrevoked consents from holders of Previously Issued Notes as of 5:00 p.m., New York City time, on September 13, 2017 holding no less than a majority in aggregate principal amount of the outstanding Previously Issued Notes, excluding Previously Issued Notes held by the Issuers or any affiliates of the Issuers (the “Requisite Consents”), on or prior to 5:00 p.m., New York City time, on September 20, 2017, unless extended or earlier terminated by the Issuers, and,
if the Requisite Consents are obtained, the execution of a supplemental indenture to the indenture governing the Previously Issued Notes, providing for the proposed amendments to the indenture, including an increase in the amount of additional secured indebtedness that may be incurred by the Issuer and its restricted subsidiaries.
The Additional Notes and the guarantees have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
This press release is for informational purposes only and is not an offer to sell or purchase nor the solicitation of an offer to sell or purchase securities and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which, or to any person to whom, such an offer, solicitation or sale would be unlawful.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995 regarding Gogo’s financing plans, including statements related to the Issuers’ offering of the Additional Notes and intended use of net proceeds of the offering, that are based on management’s beliefs and assumptions and on information currently available to management. Such statements are subject to certain risks and uncertainties including, without limitation, risks related to whether the Issuers will consummate the offering of the Additional Notes on the expected terms, or at all, market and other general economic conditions, whether the Issuers and the Guarantors will be able to satisfy the conditions required to close any sale of the Additional Notes, and the fact that Gogo’s management will have broad discretion in the use of the proceeds from any sale of the Additional Notes. Forward-looking statements represent the beliefs and assumptions of Gogo only as of the date of this press release and Gogo undertakes no obligation to update or revise publicly any such forward-looking statements, whether as a result of new information, future events or otherwise. As such, Gogo’s future results may vary from any expectations or goals expressed in, or implied by, the forward-looking statements included in this press release, possibly to a material degree. For a discussion of some of the important factors that could cause Gogo’s results to differ materially from those expressed in, or implied by, the forward-looking statements included in this press release, investors should refer to the disclosure contained under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Gogo’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
September 2017 Investor Presentation Exhibit 99.2 GOGOAIR.COM | ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.
Safe harbor statement This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based on management’s beliefs and assumptions and on information currently available to management. Most forward-looking statements contain words that identify them as forward-looking, such as “anticipates,” “believes,” “continues,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms that relate to future events. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Gogo’s actual results, performance or achievements to be materially different from any projected results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent the beliefs and assumptions of Gogo only as of the date of this presentation and Gogo undertakes no obligation to update or revise publicly any such forward-looking statements, whether as a result of new information, future events or otherwise. As such, Gogo’s future results may vary from any expectations or goals expressed in, or implied by, the forward-looking statements included in this presentation, possibly to a material degree. Gogo cannot assure you that the assumptions made in preparing any of the forward-looking statements will prove accurate or that any long-term financial or operational goals and targets will be realized. In particular, the availability and performance of certain technology solutions yet to be implemented by the Company set forth in this presentation represent aspirational long-term goals based on current expectations. For a discussion of some of the important factors that could cause Gogo’s results to differ materially from those expressed in, or implied by, the forward-looking statements included in this presentation, investors should refer to the disclosure contained under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s filings with the SEC, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Note to Certain Operating and Financial Data In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), Gogo also discloses in this presentation certain non-GAAP financial information, including Adjusted EBITDA. This financial measure is not a recognized measure under GAAP, and when analyzing our performance, investors should use Adjusted EBITDA in addition to, and not as an alternative to, net loss attributable to common stock as a measure of operating results. In addition, this presentation contains various customer metrics and operating data, including numbers of aircraft or units online, that are based on internal company data, as well as information relating to the commercial and business aviation market, and our position within those markets. While management believes such information and data are reliable, they have not been verified by an independent source and there are inherent challenges and limitations involved in compiling data across various geographies and from various sources.
Today’s speakers GOGOAIR.COM | Michael Small President and Chief Executive Officer Barry Rowan Executive Vice President and Chief Financial Officer Varvara Alva Vice President, Investor Relations and Treasurer
GOGOAIR.COM | Transaction Overview Who We Are Strong Execution And Path To Profitability Why Invest In Gogo
Transforming the aviation industry 1) As of 6/30/2017 2) Based on management estimates, public filings and trade publications of broadband IFC installations as of 6/30/2017 7,500+ 50% 92% North America market share in Business aviation2 Broadband aircraft online1 Global market share in Commercial aviation2 Gogo is the leading global provider of broadband connectivity products and services for aviation
Gogo’s inflight internet leadership Network Solutions Software & Platform Support Services Deliver industry-leading connectivity performance to global aviation Satellite: 2Ku & Ku Air-to-ground: - Next-Gen ATG - ATG - ATG4 Enable customizable experiences for passengers and support aviation operations Passenger experience - Internet - Wireless Entertainment Operational Apps Open architecture Install, monitor, manage and maintain connectivity solutions Installation Certification Operations Maintenance Inflight live customer care 24-hr network monitoring Business intelligence/analytics
Industry leading accomplishments Network Technology Aircraft Operations 2017 Airline Wins Next generation modem is introduced increasing throughput capability by 16 times on satellite connectivity systems 4G systems started shipping in Business Aviation Next generation ATG technology development is on track demonstrated 100+ mbps speed in lab 300+ 2Ku aircraft online with installation ramp underway Continue to expect 450 – 550 2Ku installations in 2017 2Ku record installation achieved – under 2 days All major STCs received for aircraft installation in 2017 Airbus OEM offerability agreement reached with first A350 delivery completed
Most planes and expanding opportunities Gogo CA - Satellite Gogo BA - ATG Gogo CA – ATG Note: Data based on management estimates, trade publications, Boeing Current Market Outlook 2016-2035, JetNet iQ Report Q1 2017, and other public sources as of 6/30/2017 and includes both commercial and business broadband connected aircraft where specified Number of aircraft online Q2’ 17 Market opportunity Commercial aviation ~10,000 uncommitted aircraft today ~2,000 new aircraft delivered per year Business aviation ~25,000 aircraft without broadband today ~1,000 new aircraft delivered per year
Leading connectivity technology for all aircraft (2) (3) 2Ku 100+ Mbps and global coverage High availability Network Redundancy Live TV Flying on 250+ aircraft globally Global – Satellite (2) Addressable Aircraft Next Gen ATG ATG, ATG-4 North American coverage Overnight installs High speed & low latency Light weight Next Gen ATG availability expected in 2018 North America – Air-To-Ground ~22,000 (1) (3) ~18,000 (2) 1 Next Gen ATG expected to be available in 2018 and expected to deliver 100 Mbps 2 Global commercial aircraft estimate from Boeing Market Outlook 2016-2035, excluding regional jets 3 Includes North American business jets and turboprops estimate from JetNet iQ Report Q1 2017 and commercial regional jets from Boeing Market Outlook 2016-2035 and management estimates
Growing satellite aircraft connectivity awards Note: 2Ku awards include both signed contracts and letters of intent 2015 2016 2014 50 500 1,500 1,800+ 2017
2Ku is changing the customer experience Expected results and availability based on management estimates. High speed, everywhere, all the time 15+ Mbps per passenger 98% coverage of global flight hours 98% service availability
* Source: JetNet iQ Report Q1 2017 and Gogo estimates as of June 2016 Large Jets ~3,000 Aircraft * * * * PURCHASE MOTIVATION + Bandwidth Applications + GLOBAL: JX/SBB SBB SBB SBB REGIONAL: ATG/4G/ Next Gen ATG ATG/4G/ Next Gen ATG ATG/4G ATG/4G/ Next Gen ATG Medium Jets ~4,000 Aircraft Light Jets ~5,000 Aircraft Turboprops ~8,500 Aircraft Portfolio of business aviation solutions
GOGOAIR.COM | Transaction Overview Who We Are Strong Execution And Path To Profitability Why Invest In Gogo
Strong revenue and profitability growth Note: Minor differences exist due to rounding (1) Please see reconciliation of Adjusted EBITDA in appendix 22% CAGR CA-ROW Segment Loss Adjusted EBITDA Revenue ($M) Adjusted EBITDA ($M) (1)
#1 MORE BANDWIDTH Profitability path for all segments 17% margin 44% margin Note: Note market share is based on installed aircraft from public sources, trade publications, management estimates and other public sources as of 6/30/2017 CA-NA CA-ROW BA 2,791 Aircraft Online 66% Market Share 318 Aircraft Online 13% Market Share ~620 Awarded but not yet installed aircraft 4,453 ATG Aircraft Online 92% Market Share MORE AIRCRAFT MORE AIRCRAFT Profitability Drivers Q2 '17 LTM Revenue ($M) Q2 '17 LTM Segment Profit ($M) Q2 '17 LTM Revenue ($M) Q2 '17 LTM Segment Loss ($M) Q2 '17 LTM Revenue ($M) Q2 '17 LTM Segment Profit ($M)
Strategic priorities (1) Free cash flow is defined as cash flow from operating activities less consolidated capital expenditures. Expand technology leadership • Extend global 2Ku roadmap • Deploy next gen ATG solution • Invest in our industry-leading IFC and IFE platforms Scale globally • Install 2Ku aircraft awards efficiently and aggressively • Achieve 2Ku OEM offerability starting in 2017 • Increase penetration of ATG and 2Ku in BA market Achieve profitability • Scale CA-ROW segment to profitability • Further reduce 2Ku installation costs • Double ARPA by 2021 from Q3 2016 level • Achieve free cash flow in 2019(1) 1 2 3
Grow Stakeholder Value MORE AIRCRAFT Significant backlog Growing market Leading market share DECLINING INVESTMENT PER AIRCRAFT ARPA GROWTH MARGIN IMPROVEMENT Decreasing installation time Lower airborne equipment costs Higher airborne equipment proceeds Leverage STC portfolio Increase network capacity Expand payers and services Increase passenger adoption Enable connected aircraft services Drive bandwidth costs down Leverage investments in global network & operations Path to profitability
GOGOAIR.COM | Transaction Overview Who We Are Strong Execution And Path To Profitability Why Invest In Gogo
Diverse capital structure backed by valuable assets Note: Minor differences exist due to rounding 1) As of 6/30/2017 2) Based on stock price of $14.20 per share on 9/18/2017 CAPITALIZATION ($M) Cash, Cash Equivalents, and Short Term Investments1 380 Senior Secured Notes1 590 Convertible Notes1 362 Total Debt 952 Net Debt 572 Market Value2 1.2B 7,500+ Broadband Aircraft Online1 Profitable North American Business Intellectual Property Portfolio (Superior Network Capabilities) Embedded Aviation Industry Relationships 1,200+ Highly Specialized, Talented Workforce Valuable 850MHz Spectrum VALUABLE ASSETS $
Positioned for success Leading position, experience & scale Large opportunities for growth Technology leadership Clear path to free cash flow
Appendix
Pro forma corporate structure Gogo Intermediate Holdings LLC+ Gogo Inc.* Gogo International Holdings LLC Holding Company AC BidCo LLC* Holds Spectrum License 100% 100% 100% 100% 100% 100% Market capitalization of $1,152M as of September 19, 2017 $362M 3.75% Convertible Senior Notes due 2020 Gogo Finance Co. Inc.+ Gogo LLC* CA Operating Company Gogo Business Aviation LLC* BA Operating Company $690M 12.50% Senior Secured Notes due 2022 * Guarantors of Senior Secured Notes +Co-issuer of Senior Secured Notes
Adjusted EBITDA reconciliation ($M) 2011 2012 2013 2014 2015 2016 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 Net Income (18) (96) (146) (85) (108) (125) (40) (33) (27) (41) (44) Interest Income (0) (0) (0) (0) (0) (2) (0) (1) (1) (1) (1) Interest Expense 1 9 29 33 59 84 18 25 25 27 27 Income Tax Provision 1 1 1 1 1 1 Depreciation & Amortization 33 37 56 64 87 106 25 27 30 30 31 EBITDA 16 (49) (60) 14 39 64 2 18 27 16 13 Fair Value Derivative Adjustments (59) (10) 36 – – – – – – – Class A and Class B Senior Convertible Preferred Stock Return 31 52 29 – – – – – – – Accretion of Preferred Stock 10 10 5 – – – – – – – Stock-based Compensation Expense 2 4 6 10 15 18 4 5 5 4 5 Amortization of Deferred Airborne Lease Incentives (1) (4) (8) (13) (20) (30) (7) (8) (9) (9) (9) Loss on Extinguishment of Debt – – – – – 15 15 – – – – Adjustment of deferred financing costs – 5 – – 2 (1) – – – – – Adjusted EBITDA (1) 9 8 11 37 67 14 15 23 11 10 Note: Minor differences exist due to rounding
Superior global satellite network Future Ku HTS coverage Current Ku coverage Access to most global satellite capacity including HTS Ability to integrate next generation satellite constellations seamlessly Providing capacity when and where airline partners need it