Business Context and Reporting Period
Company: Gogo Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 28, 2019 (Earliest event reported: August 26, 2019)
Context: The filing discloses the entry into a material definitive agreement establishing a new asset-based revolving credit facility.
Key Financial Metrics and Debt Structure
New Credit Facility:
- Facility Type: Asset-Based Revolving Credit Facility (ABL Credit Facility).
- Maximum Capacity: Up to $30 million, subject to borrowing base availability.
- Borrowing Base: Calculated monthly based on specified percentages of eligible accounts receivable (including unbilled) and eligible credit card receivables, less reserves.
- Interest Rates:
- Adjusted LIBOR (floor 0.00%) + 1.50% to 2.00% margin.
- Alternate Base Rate + 0.50% to 1.00% margin.
- Unused Commitment Fee: 0.25% to 0.375% per annum.
- Maturity Date: August 26, 2022. However, if the 6.00% Convertible Senior Notes due 2022 are not repaid or refinanced by December 15, 2021, the maturity accelerates to December 16, 2021.
Collateral and Security:
- ABL Priority Collateral: Senior security interest in inventory, accounts receivable, deposit accounts, and securities accounts.
- Cash Flow Priority Collateral: Junior security interest in substantially all other tangible and intangible assets.
- Guarantors: Gogo Inc. and all existing and future subsidiaries (subject to exceptions).
Financial Performance Metrics: The filing text does not provide specific values for revenue, profit, cash flow, margins, or liquidity positions for the reporting period.
Material Changes Versus Prior Period
This filing represents a new material definitive agreement entered into on August 26, 2019. It establishes a new $30 million credit facility and associated security documents (ABL Collateral Agreement, Intercreditor Agreement, and IP Security Agreements). The filing does not provide comparative financial data to quantify changes in revenue or profitability versus prior periods.
Guidance, Outlook, Risks, and Covenants
Covenants and Restrictions:
- Negative Covenants: Restrictions on additional indebtedness, liens, dividends/distributions, stock repurchases, asset sales, mergers, and affiliate transactions.
- Payment Conditions: Certain actions (e.g., dividends, debt redemption) require "Specified Availability" to exceed agreed thresholds for the current date and the prior 30-day period, plus pro forma compliance with a fixed charge coverage ratio of at least 1.10 to 1.00.
- Financial Maintenance Covenant: A minimum fixed charge coverage ratio of 1.00 to 1.00 is required only when Specified Availability falls below the greater of $4.5 million or 15.0% of effective commitments.
Risks and Contingencies:
- Events of Default: Occurrence of default events would permit immediate acceleration of all outstanding obligations and termination of commitments.
- Maturity Risk: The facility's maturity is contingent on the status of the 6.00% Convertible Senior Notes due 2022.
Management Commentary: The filing incorporates a press release dated August 27, 2019, announcing the closing of the agreement, but does not contain detailed management commentary on future outlook or strategy within the text provided.
Key Facts for Investor Verification
- Verify the current "Specified Availability" under the new ABL facility to assess immediate liquidity and covenant compliance.
- Confirm the status of the 6.00% Convertible Senior Notes due 2022 to determine if the ABL facility maturity will remain in 2022 or accelerate to late 2021.
- Review the specific borrowing base percentages and reserve calculations to understand the actual usable capacity versus the $30 million headline figure.
- Assess the impact of the new senior lien on accounts receivable and inventory on existing debt structures, specifically the 9.875% Senior Secured Notes due 2024.