Gogo Inc. Fair Value Disclosure
12. Fair Value of Financial Assets and Liabilities
Refer to Note 2, “Acquisition of Satcom Direct,” for fair value information relating to the Satcom Direct acquisition.
Refer to Note 10, “Derivative Instruments and Hedging Activities,” for fair value information relating to our interest rate caps.
Investment in Convertible Note:
On February 26, 2024, Gogo invested $5 million in a convertible note offering (“Investment in Convertible Note”). The Investment in Convertible Note accrues interest at 5% per annum, payable upon maturity of the note or upon conversion, and matures two years after the date of issuance. We have elected to measure our Investment in Convertible Note using the fair value option and record changes in fair value, including accrued interest, in Other (income) expense, net on the Consolidated Statements of Operations. The Company elected the fair value option for the Investment in Convertible Note to eliminate complexities of applying certain accounting models.
The reconciliation of beginning and ending balances of the Investment in Convertible Note as of December 31, 2025 were as follows (in thousands):
|
|
Investment in Convertible Note |
|
|
Balance at January 1, 2024 |
|
$ |
— |
|
Investment |
|
|
5,000 |
|
Change in fair value |
|
|
(793 |
) |
Balance at December 31, 2024 |
|
|
4,207 |
|
Change in fair value |
|
|
(3,552 |
) |
Balance at December 31, 2025 |
|
$ |
655 |
|
Long-Term Debt:
As of December 31, 2025 and 2024, our only financial assets and liabilities disclosed but not measured at fair value are the 2021 Term Loan Facility and the HPS Term Loan Facility, which are reflected on the consolidated balance sheets at cost. The fair value measurements are classified as Level 2 within the fair value hierarchy since they are based on quoted market prices of our instruments in markets that are not active. We estimated the fair values of the 2021 Term Loan Facility and the HPS Term Loan Facility by calculating the upfront cash payments a market participant would require to assume these obligations. The upfront cash payments used in the calculations of fair values on our consolidated balance sheets, excluding any issuance costs, are the amounts that a market participant would be willing to lend at such date to an entity with a credit rating similar to ours and that would allow such an entity to achieve sufficient cash inflows to cover the scheduled cash outflows under the 2021 Term Loan Facility and HPS Term Loan Facility.
The fair value and carrying value of long-term debt as of December 31, 2025 and 2024 was as follows (in thousands):
|
|
December 31, 2025 |
|
|
|
December 31, 2024 |
|
|
||||||||||
|
|
Fair Value (1) |
|
|
Carrying |
|
|
|
Fair Value (1) |
|
|
Carrying |
|
|
||||
2021 Term Loan Facility |
|
$ |
550,000 |
|
|
$ |
600,225 |
|
(2) |
|
$ |
572,000 |
|
|
$ |
599,776 |
|
(2) |
HPS Term Loan Facility |
|
$ |
238,000 |
|
|
$ |
243,273 |
|
(3) |
|
$ |
244,000 |
|
|
$ |
244,469 |
|
(3) |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.