| ITEM 1.01. | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On August 31, 2020, Intelsat Jackson Holdings S.A., a société anonyme organized under the laws of the Grand Duchy of Luxembourg (the “Buyer”) and an indirect subsidiary of Intelsat S.A. (the “Company”), and Gogo Inc., a Delaware corporation (the “Seller”), entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with respect to the Seller’s commercial aviation business (the “Target Business”) for $400.0 million in cash, subject to customary adjustments (the “Purchase Price”). The Buyer intends to fund the Purchase Price with proceeds from its existing superpriority secured debtor-in-possession term loan facility (the “DIP Facility”) and cash on hand. In connection therewith, the Buyer entered into an amendment to the credit agreement governing its DIP Facility (as amended, the “DIP Credit Agreement”) to permit the transactions contemplated by the Purchase and Sale Agreement (the “Transaction”), which was approved by an order (the “Bankruptcy Court Order”) of the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”) on August 31, 2020.
Transaction Structure
Subject to the terms and conditions set forth in the Purchase and Sale Agreement, (i) the Seller shall sell all of the issued and outstanding units in Gogo LLC, a Delaware limited liability company (“Gogo CA”), and Gogo International Holdings LLC, a Delaware limited liability company (“Gogo International” and, together with Gogo CA, the “Transferred Companies” and the Transferred Companies together with their respective subsidiaries, the “Target Companies”) to the Buyer, and (ii) the Buyer shall pay the Purchase Price and certain transaction expenses.
Conditions to the Transaction
The consummation of the Transaction is subject to the satisfaction or waiver of certain customary conditions, including, among others: (i) the receipt, expiration or termination of all applicable waiting, notice or review periods and approvals under certain competition laws; (ii) the receipt of clearance from the Committee on Foreign Investment in the United States; (iii) the receipt of the approval from the Federal Communications Commission and certain other foreign regulators to transfer permits used in the Target Business issued to the Target Companies; and (iv) the absence of certain other legal impediments to the consummation of the Transaction.
The Buyer’s and the Seller’s respective obligations to consummate the Transaction are also subject to certain additional customary conditions, including (i) the accuracy of representations and warranties of the other party (generally subject to a “material adverse effect” standard), (ii) the performance by the other party of its covenants in all material respects and (iii) with respect to the Buyer’s obligations to consummate the Transaction, since the date of the Purchase and Sale Agreement, no material adverse effect with respect to the Target Business or the Target Companies having occurred.
The Transaction does not require approval of the Buyer’s or the Seller’s stockholders and is not subject to any financing contingency.
Other Terms of the Purchase and Sale Agreement
The Purchase and Sale Agreement contains customary representations, warranties and covenants for a transaction of this nature and also contains customary pre-closing covenants, including, but not limited to, (i) the obligation of the Seller to (a) cause each of the Target Companies to use reasonable best efforts to conduct the Target Business in the ordinary course of business and (b) refrain from taking certain specified actions without the consent of the Buyer and (ii) the obligation of the Buyer to use reasonable best efforts to maintain in effect the DIP Credit Agreement, which may not be materially amended in certain respects without prior written consent of the Seller. Each party also agreed, subject to the terms of the Purchase and Sale Agreement, to use reasonable best efforts to take all appropriate action and to do all things necessary, proper or advisable under applicable law or otherwise to consummate and make effective the Transaction, including taking certain actions to obtain regulatory approval; provided that nothing shall obligate the Buyer or any of its affiliates to take any action that would materially and adversely affect the value of the Target Companies and the Buyer and its affiliates as a whole.
The Purchase and Sale Agreement contains a customary exclusivity provision, according to which, the Seller shall not directly or indirectly solicit, initiate, encourage or conduct any discussions, negotiations or communications concerning a sale of all or any part of the Target Business or the Target Companies (an “Alternative Transaction”), (ii) agree to endorse or recommend any Alternative Transaction or (iii) submit any Alternative Transaction to the vote of its stockholders.
The Purchase and Sale Agreement contains certain termination rights for both the Buyer and the Seller. The Seller may terminate the Purchase and Sale Agreement by notice if either the Bankruptcy Court Order or the order from the Bankruptcy Court dated June 9, 2020 approving the DIP Facility ceases to be in full force and effect or is modified in any manner that is adverse to the Seller, in the good faith judgement of the Seller, without prior written consent of the Seller and such cessation or modification is not cured within 5 business days after delivery of a written notice. Either party may terminate the Purchase and Sale Agreement if the Transaction is not consummated on or before an end date of April 30, 2021, provided that either party may extend such date by three months to July 31, 2021 if necessary to obtain regulatory approvals under circumstances specified in the Purchase and Sale Agreement. No termination fee is payable upon termination of the Purchase and Sale Agreement.
