Amended partnership agreement provides
enhanced timing flexibility for path to full ownership of
MBI
Cable One, Inc. (NYSE: CABO) (“Cable One”) announced today that
it has amended the terms of its strategic investment in Mega
Broadband Investments Holdings LLC (“MBI”) to provide enhanced
timing flexibility for Cable One’s potential acquisition of full
ownership of MBI. Cable One currently owns a 45% stake in MBI, and
affiliates of GTCR LLC (“GTCR”) and MBI management own the balance
of MBI. The amendments provide Cable One with enhanced ability to
control the timing for acquiring the 55% interest it does not
currently own pursuant to the put right held by GTCR, with any such
acquisition to occur no earlier than October 1, 2026 unless Cable
One elects to close the transaction at an earlier date.
“Our strategic investment in MBI reflects our commitment to
provide rural America with reliable high-speed internet service,”
said Julie Laulis, President and CEO of Cable One. “We continue to
value MBI for all the reasons that first drew us to them: their
commitment to providing leading broadband services in rural
markets, their track record of strong growth and impressive
potential for future growth, as well as their exceptional
team.”
Todd Koetje, CFO of Cable One, said, “We are pleased with the
terms provided by the partnership agreement amendments, which we
believe will further enhance Cable One’s overall capital structure
flexibility, as our net leverage ratio is now expected to peak in
the fourth quarter of 2024 following this transaction.”
MBI is a leading provider of broadband services across the
Southeast, Northwest and Mid-South United States and offers an
extensive range of broadband, fiber connectivity, cable television
and voice services for commercial and residential customers under
the Vyve Broadband brand. MBI's total revenues for the 12 months
ended September 30, 2024 were approximately $320 million, with
approximately 226,000 residential and business data customers
across a network footprint with approximately 674,000 passings as
of September 30, 2024.
Transaction Details
As part of the amended partnership agreement, Cable One paid
$250 million to the other MBI equity holders, and those same other
equity holders also received the proceeds from $100 million of new
MBI debt. The combined $350 million of payments will reduce the
purchase price payable by Cable One on a dollar-for-dollar basis
for the 55% interest in MBI it does not currently own as described
in more detail below. Concurrently, new arrangements were put in
place to provide timing flexibility for Cable One’s potential
acquisition of full ownership of MBI:
- Cable One has a new option to call the 55% of MBI it does not
already own, exercisable starting in the third quarter of
2025;
- GTCR’s existing option to put to Cable One the 55% of MBI it
does not already own has been adjusted to defer the closing of any
put exercise to no earlier than October 1, 2026 (unless Cable One
elects to cause the closing to occur earlier);
- If the closing of a put option exercise or call option exercise
occurs prior to October 1, 2026, the purchase price payable by
Cable One will be discounted at a rate of 12% for the period from
October 1, 2026 to the closing date.
The purchase price payable by Cable One at the closing of a call
option exercise or put option exercise will be calculated under a
formula based on (i) a multiple of MBI’s adjusted earnings before
interest, taxes, depreciation and amortization for the 12-month
period ended June 30, 2025 and (ii) MBI’s total net indebtedness
(disregarding the impact of the $100 million of new MBI debt
described above), less a dollar-for-dollar reduction for both the
upfront payment and the proceeds from the new MBI debt received by
the other MBI equity holders as part of the amendment.
Based on currently available information, if the closing of a
call option exercise or put option exercise occurs on October 1,
2026, Cable One estimates that (i) the purchase price payable by
Cable One will range between approximately $410 million and $550
million and (ii) MBI’s total net indebtedness that will be
outstanding at the time it becomes wholly-owned by Cable One will
be approximately $845 million to $895 million. These estimates are
based on MBI’s past performance and current forecasts and are
subject to numerous assumptions and risks including, without
limitation, factors that could impact MBI’s performance, such as
competition, economic conditions, operating performance and other
factors referenced below under “Cautionary Statement Regarding
Forward-Looking Statements”. If any of those underlying assumptions
prove incorrect, or if any of those risks materialize, the actual
purchase price payable by Cable One upon a call option exercise or
put option exercise and the amount of MBI’s indebtedness
outstanding at that time may differ from the estimated amounts
described above.
Cravath, Swaine & Moore LLP acted as legal advisor, and
Centerview Partners LLC acted as financial advisor to Cable One on
the amended partnership transaction.
About Cable One
Cable One, Inc. (NYSE:CABO) is a leading broadband
communications provider delivering exceptional service and enabling
more than 1 million residential and business customers across 24
states to thrive and stay connected to what matters most. Through
Sparklight® and the associated Cable One family of brands, we're
not just shaping the future of connectivity–we're transforming it
with a commitment to innovation, reliability and customer
experience at our core.
Our robust infrastructure and cutting-edge technology don’t just
keep our customers connected; they help drive progress in
education, business and everyday life. We’re dedicated to bridging
the digital divide, empowering our communities and fostering a more
connected world. When our customers choose Cable One, they are
choosing a team that is always working for them–one that believes
in the relentless pursuit of reliability, because being a trusted
neighbor isn’t just what we do–it’s who we are.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Actual results may differ materially from those expressed or
implied by these statements. You can generally identify
forward-looking statements by the words “anticipate,” “believe,”
“can,” “continue,” “could,” “estimate,” “expect,” “forecast,”
“goal,” “intend,” “may,” “might,” “objective,” “outlook,” “plan,”
“potential,” “predict,” “projection,” “seek,” “should,” “target,”
“trend,” “will,” “would” or the negative version of these words or
other comparable words. Any statements regarding expectations and
opportunities related to MBI, Cable One’s future net leverage
ratio, the related put right and call right, the amounts payable
upon the exercise of those rights and any other statements that are
not historical facts are forward-looking statements. Such
forward-looking statements are subject to various risks,
uncertainties, assumptions, or changes in circumstances that are
difficult to predict or quantify. Accordingly, there are or will be
important factors that could cause actual outcomes or results to
differ materially from those indicated in these statements. These
factors include, but are not limited to, the factors described
under “Risk Factors” in Cable One’s Amendment No.1 to its Annual
Report on Form 10-K/A for the period ended December 31, 2023 and
its other filings with the Securities and Exchange Commission, and
uncertainties, assumptions and changes in circumstances that may
cause Cable One’s and/or MBI’s actual results, performance or
achievements to differ materially from those expressed or implied
in any forward-looking statement. Each forward-looking statement
contained herein speaks only as of the date of this press release,
and Cable One undertakes no obligation to update or revise any
forward-looking statements whether as a result of new information,
future developments or otherwise, except as required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241219790728/en/
Trish Niemann Vice President, Communications Strategy
patricia.niemann@cableone.biz Todd Koetje CFO
investor_relations@cableone.biz
Cable One (NYSE:CABO)
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