Intelsat will purchase the Commercial Aviation business from Gogo for a “headline” price of $400 million. Intelsat’s attorney’s announced the deal as part of a hearing at the US Bankruptcy Court this afternoon.
“The acquisition makes Intelsat immediately competitive.”
– Steven Serajeddini, Attorney for Intelsat’s Debtors
The deal covers 100% of the outstanding equity interests of Gogo’s Commercial Aviation (“CA”) on a debt-free, cash-free basis. It depends on typical closing conditions, including antitrust, FCC and international review.
Gogo CEO Oakleigh Thorne says the deal gives the Commercial Aviation segment “A strong home, a financially stable home.” That may sound a bit strange given that Intelsat is in the middle of a Chapter 11 bankruptcy reorganization right now, but the company has its debtor-in-possession financing lined up and even secured an additional tranche of cash from the debtors to complete this acquisition.
The Chapter 11 process also allows Intelsat to restructure its significant debt loads. Combined with the proceeds of the C-Band spectrum clearing payouts from the US government (nearly $5 billion on the horizon), the finances should be strong coming out of the bankruptcy proceedings.
The deal also hinged on approval from the bankruptcy court for a change in the financing of the Intelsat bankruptcy. That was approved by the judge this afternoon. In doing so the judge notes, “The transaction represents the sound business judgement of the debtors in the case.”
The companies expect to complete the transaction by the end of Q1 2021 according to Thorne.
Keeping ties strong
As Intelsat takes over the CA business the two companies will retain connections. Among other things, the air-to-ground network used on regional jets is still owned by the Business Aviation division. Intelsat will lease access to that network to keep the RJ fleet online.
There’s more to the story…Dig deeper with a PaxEx.Aero Premium Subscription
A favor to ask while you're here...
Did you enjoy the content? Or learn something useful? Or generally just think this is the type of story you'd like to see more of? Consider supporting the site through a donation (any amount helps). It helps keep me independent and avoiding the credit card schlock.
JamesP says
Well that’s one CEO with a major talent to BS.