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GLOBAL EAGLE: Mgt. Says Going Concern Doubt Not Yet Alleviated

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Global Eagle Entertainment Inc. filed its quarterly report on Form 10-Q, disclosing a net loss of $80,925,000 on $144,165,000 of total revenue for the three months ended March 31, 2020, compared to a net loss of $37,609,000 on $166,619,000 of total revenue for the same period in 2019.

At March 31, 2020, the Company had total assets of $630,476,000, total liabilities of $1,086,327,000, and $455,851,000 in total stockholders’ deficit.

Global Eagle said, “The Company’s management has evaluated events and conditions, including historical losses and negative cash flows from operations, government and industry-imposed travel restrictions in the aviation and maritime industries that the Company services, and the Company’s projected future violations with the covenants contained in our existing indebtedness, including the maximum consolidated first lien net leverage ratio (“Maximum First Lien Leverage”) and a covenant requiring it to maintain minimum levels of undrawn revolving commitments plus cash and cash equivalents (“Minimum Liquidity”) contained in the Senior Secured Credit Agreement entered into on January 6, 2017 (as amended, the “2017 Credit Agreement”), in future periods. These events and conditions have raised substantial doubt of the Company’s ability to satisfy existing debt obligations and pay down past due accounts payable and other obligations as they become due in the next 12 months.

“The Company’s management has plans in-place, and is working with outside advisors, to address the substantial doubt about the Company’s ability to continue as a going concern. Mitigating actions implemented in the first quarter include temporary salary reductions for all employees, including executive offices and the Company’s Board of Directors, negotiations with both customers and vendors to revise existing contracts to current activity levels and executing substantial reductions in capital expenditures and overall costs.

“In addition, the Company’s management is pursuing actions to maximize cash available to meet our obligations as they become due in the ordinary course of business, including (i) executing additional substantial reductions in expenses, capital expenditures and overall costs; (ii) applying for all eligible global government and other initiatives available to businesses or employees impacted by the COVID-19 pandemic, primarily through payroll and wage subsidies and deferrals; (iii) submitted applications for U.S. Treasury Loans through the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. There is no assurance that our applications will be approved or that any sources of financings under the CARES Act will be available to us on favorable terms or at all; and (iv) accessing alternative sources of capital, in order to generate additional liquidity. These actions are intended to mitigate those conditions which raise substantial doubt of the Company’s ability to continue as a going concern. While we continue to work toward completing these items and taking other actions to create additional liquidity and comply with the payment and other covenants set forth in its debt agreements, there is no assurance that we will be able to do so. Our ability to meet our obligations as they become due in the ordinary course of business for the next 12 months will depend on our ability to achieve improved results, our ability to generate and conserve cash, our ability to obtain necessary waivers from lenders and other equity stakeholders to achieve sufficient cash interest savings therefrom and our ability to complete other liquidity-generating transactions. Based on the uncertainty of achieving these actions the Company’s management has determined that the substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of this Quarterly Report on Form 10-Q has not been alleviated.”

A copy of the Form 10-Q is available at:

https://is.gd/XXtB0z

Global Eagle Entertainment Inc. provides media and satellite-based connectivity to fast-growing, global mobility markets across air, land and sea. Global Eagle offers a fully integrated suite of rich media content and seamless connectivity solutions around the globe. The Company is headquartered in Los Angeles, California.

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