S&P rates Gogo convertibles CCC-

S&P said it assigned its CCC- issue-level rating and 6 recovery rating to Gogo Inc.'s proposed convertible senior unsecured notes due 2022.

The 6 recovery rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%) in the event of a payment default.

Gogo intends to offer $200 million of new convertible notes, or $230 million if the initial purchasers exercise their option to purchase additional notes in full.

In connection with the offering, Gogo intends to repurchase about $200 million of the existing $362 million convertible notes.

“Although we remain concerned about Gogo's liquidity due to the cash burn rate of its business, we view this transaction as modestly credit positive because it proves the company's ability to access the capital markets and partially pushes out an upcoming maturity,” S&P said in a news release.

“This should provide management with a cushion to continue exploring strategic partnerships and possible asset sales.”

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