Cable One Enhances Strategic Partnership with Mega Broadband

Cable One Strengthens Partnership with Mega Broadband

Cable One, Inc. (NYSE: CABO) has recently modified its strategic investment in Mega Broadband Investments Holdings LLC (MBI), enhancing the options for future acquisitions of MBI. Cable One currently possesses a 45% share in MBI, while the remaining equity is held by GTCR LLC and MBI's management. The recent amendments obtained by Cable One provide a broader timeline for potentially acquiring full ownership of MBI, encouraged by the existing put right maintained by GTCR. Noteworthy is the flexibility this provides, allowing Cable One to arrange the purchase for a 55% stake no sooner than an agreed future date unless Cable One opts for an earlier transaction.

Commitment to High-Speed Internet

Julie Laulis, President and CEO of Cable One, expressed her enthusiasm about the adjustments made in the partnership with MBI. "Our strategic investment in MBI reflects our commitment to improve high-speed internet services for rural America," Laulis stated. She underscored the importance of MBI's mission to enhance broadband services in rural communities, highlighting its continual growth and dedicated team.

Todd Koetje, the Chief Financial Officer of Cable One, commented on the favorable terms of the amended agreement, emphasizing that the adjustments would reinforce Cable One's overall capital structure. The anticipated peak in net leverage ratio aligns with the upcoming changes for the fourth quarter, indicating an optimistic outlook for financial stability.

Broadband Services Overview

As a major provider, MBI offers a diverse array of broadband services under the Vyve Broadband brand. With extensive service coverage across various regions in the United States, MBI has posted impressive financial figures. For the recent twelve months, revenues reached approximately $320 million, servicing about 226,000 residential and business data customers. This expansive network comprises around 674,000 potential service locations. Their success in the telecommunications space demonstrates the robust demand for reliable internet in underserved areas.

Transaction Highlights

The revised partnership agreement included a significant financial commitment from Cable One, with a payment of $250 million to MBI's other equity holders. This amount is complemented by an additional $100 million from a newly arranged MBI debt investment. As a result, the total of $350 million will serve to modify the total purchase price that Cable One will pay in acquiring the remaining 55% interest in MBI in the future.

Strategic Flexibility for Acquisition

Under the new conditions, Cable One is empowered to pursue the acquisition of MBI at a more strategic juncture. Beginning in the third quarter of 2025, Cable One now possesses an option to affirm the outstanding 55% interest of MBI. Conversely, GTCR's existing right for Cable One to purchase their percentage has been shifted, deferring any potential closing to no earlier than a specified date in 2026 unless Cable One opts for an earlier execution. This organizational adjustment enhances Cable One's strategic approach to manage its investments.

Financial Projections and Future Outlook

In analyzing the financial implications, if closure on the new acquisition occurs by October 1, 2026, estimates suggest that the purchase price will likely range between $410 million to $550 million. Simultaneously, MBI's anticipated net indebtedness at the time of acquisition could be recorded between $845 million and $895 million. These forecasts, derived from MBI’s historical performance, carry inherent uncertainties and depend on a variety of market conditions. Actual outcomes will be continually adjusted based on these factors.

Expert Advice and Guidance

Legal advice was provided to Cable One by Cravath, Swaine & Moore LLP, while Centerview Partners LLC supported the company as its financial advisor throughout this partnership enhancement process. Their expertise has been instrumental in navigating the complexities surrounding this significant transaction.

About Cable One

Cable One, Inc., identified by its stock ticker NYSE:CABO, proudly stands as a prominent broadband communications provider. With over a million residential and business customers across 24 states, the company is dedicated to delivering exceptional service. Through its brands, including Sparklight, Cable One is focused on innovative solutions that connect customers to what matters most in their lives.

Fostering a more connected society, Cable One is committed to bridging the digital divide. Their advanced infrastructure not only enhances connectivity but also acts as a catalyst for growth and progress within education, business, and daily life. Choosing Cable One signifies a selection of reliability and engagement; it reflects the company’s core mission of being a trusted neighbor to its communities.

Frequently Asked Questions

1. What recent changes were made to Cable One’s partnership with MBI?

Cable One amended its strategic investment terms with MBI to allow for enhanced timing flexibility in acquiring full ownership.

2. How much stake does Cable One currently hold in MBI?

Cable One currently owns a 45% stake in Mega Broadband Investments Holdings LLC (MBI).

3. What financial implications arise from the amended agreement?

Cable One committed $250 million to MBI's equity holders and facilitated new MBI debt, impacting the purchase price for future acquisition.

4. What services does MBI provide?

MBI offers a range of broadband services, including fiber connectivity and cable television to customers across several U.S. regions.

5. Why is this acquisition important for rural America?

This acquisition enhances Cable One's ability to deliver reliable high-speed internet services to underserved rural communities.

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