Global Eagle Entertainment Inc. (Nasdaq: ENT), a leading provider of media, content, connectivity and data analytics to mobility end-markets across air, sea and land, today announced that it has agreed upon a definitive “stalking horse” asset purchase agreement under which substantially all of the Company’s assets will be acquired for total consideration of $675 million by an entity established at the direction of holders of approximately 90% of the Company’s senior secured first-lien term loans, led by lenders managed by Apollo Global Management, Inc., Eaton Vance Management, Arbour Lane Capital Management, L.P., Sound Point Capital Management, Mudrick Capital Management, or one or more of their respective affiliates, and certain funds and accounts under management by BlackRock Financial Management, Inc. (the “Investor Group”). The proposed transaction will have no material impact on Global Eagle’s global operations as the Company continues to provide services to all of its customers in the ordinary course, before and after the transaction. As a result of the proposed transaction, the Company will reduce its total debt by approximately $475 million and obtain significant additional liquidity, positioning it to continue driving long-term innovation and growth and serving its customers around the world.
“Today’s announcement represents a significant step forward that positions Global Eagle for long-term success as we continue connecting millions to high speed Wi-Fi and engaging content, anywhere, anytime,” said Joshua Marks, Chief Executive Officer of Global Eagle. “While we made important progress last year managing our cash flow and reducing operating expenses, we have been particularly impacted by COVID-19-related travel restrictions and demand declines in both airline and cruise end-markets. We expect to emerge from this process with a stronger balance sheet, significantly reduced debt and substantial liquidity, well-positioned to continue supporting our global customers into the future. Our investors have been strong strategic partners with Global Eagle, we appreciate their continued support, and we believe this is the best path forward for our company and our customers, partners and employees.”
Mr. Marks continued, “We remain steadfast in our belief that our airline, cruise line and other customers will recover from COVID-19 and generate significant long-term demand for our services. We are excited about the opportunities ahead to build on our strong foundation as the world’s leading entertainment and connectivity provider for mobility. We remain focused on supporting our customers as they plan for the COVID-19 recovery and beyond, and are working closely with our vendors and other partners. We thank our employees for their continued hard work and dedication to our customers and our company.”
Jeffrey Rosen, Managing Director with the Credit business segment of Apollo, said, “Global Eagle is a market leader in delivering in-flight and at-sea passenger experiences with entertainment, content and connectivity. While the Company reports that it has been impacted in recent months by COVID-19, we believe it benefits from a blue-chip customer base, industry-leading partnerships and an innovative platform built through years of strategic investments in technology. We believe Global Eagle’s services will continue to be core to the passenger experience over the long term, and see significant opportunities ahead for the Company to continue driving growth and innovation. We also have tremendous confidence in Josh and the management team’s ability to lead Global Eagle through the current environment and into the future, and look forward to working closely with them as we move forward.”
To facilitate the sale process, Global Eagle and certain of its U.S. subsidiaries have filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Global Eagle continues to operate, and expects to continue operating and serving customers in the ordinary course during and following the court-supervised process. The Company remains focused on supporting its customers with best-in-class media, content and connectivity solutions for aviation, maritime, enterprise and government mobility end-markets.
In connection with this in-court process, Global Eagle will be obtaining $80 million in debtor-in-possession financing from the Investor Group. The Company expects this new financing, together with cash generated from ongoing operations, to provide ample liquidity to support its operations during the sale process. In addition to this $80 million DIP financing, the acquisition is expected to be financed by an additional investment in the business in the form of a $125 million exit facility, which would include assumption or refinancing of the DIP financing.
The proposed transaction will be implemented pursuant to the terms of a Restructuring Support Agreement reached by the Company and the Investor Group. The proposed transaction is being undertaken pursuant to a court-supervised sale process under Section 363 of the U.S. Bankruptcy Code, with the Investor Group serving as the “stalking-horse” bidder. The proposed transaction is subject to higher or better offers and other customary conditions.
Global Eagle has filed a number of customary motions seeking court approval to continue supporting its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption. The Company intends to pay vendors and partners to its affected U.S. subsidiaries in full under normal terms for goods and services provided on or after the filing date, and expects to receive approval for all of these requests. Vendors to Global Eagle’s non-U.S. subsidiaries will continue to be paid in the ordinary course, regardless of when goods or services were delivered.
About Global Eagle Entertainment
Headquartered in Los Angeles, California, Global Eagle is a provider of media, content, connectivity and data analytics to markets across air, sea and land. Global Eagle offers a fully integrated suite of media content and connectivity solutions to airlines, cruise lines, commercial ships, high-end yachts, ferries and land locations worldwide.
Global Eagle Entertainment Inc., based in Los Angeles, CA, and its debtor-affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-11835) on July 22, 2020. The Hon. John T. Dorsey presides over the case.
In the petition signed by CFO Christian M. Mezger, Global Eagle disclosed $630.5 million in assets and $1.086 billion in liabilities.
Global Eagle tapped LATHAM & WATKINS LLP (CA), and YOUNG CONAWAY STARGATT & TAYLOR, LLP, as counsel; GREENHILL & CO., LLC, as investment banker; and ALVAREZ & MARSAL NORTH AMERICA, LLC, as financial advisor. PRIME CLERK LLC, is the claims and noticing agent. PRICEWATERHOUSECOOPERS LLP is the tax advisor.