S&P raises Gogo

S&P said it raised Gogo Inc.’s issuer rating a notch to B- from CCC+ and removed the ratings from CreditWatch with positive implications where the agency placed them on Sept. 1.

“The sale of Gogo’s commercial aviation unit will leave it with a stronger balance sheet. Gogo has sold off its commercial aviation (CA) business, which not only was a drag on EBITDA and cash flow, hampering leverage, but we believe also generated just below $360 million in net proceeds,” S&P said in a press release.

The company intends to use the proceeds to repay the 6% convertible notes, of which $238 million are outstanding, lowering leverage to just below 8x area, and fund the buildout of its 5G air-to-ground network.

Gogo intends to refinance its 9 7/8% senior secured notes before May to cut its interest expense, potentially improving interest coverage to the 2x area, the agency said.

The outlook is stable.

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