Cable One cannot execute its purchase of the remaining 55 percent of Mega Broadband Investments (MBI) from private-equity firm GTCR until a court hearing, US District Judge J. Paul Oetken in New York ruled late Friday, after lender CoBank ACB sued to block the roughly $480 million transaction. The judge did not set a hearing date.
The suit is the sharp end of a balance-sheet crisis. Cable One had extended the deal deadline from October 1 to October 9 while negotiating a refinancing package with GTCR, existing lenders and a private-credit group. It drew the final $700 million of a $1.25 billion revolving credit facility to stockpile cash, and CoBank says it holds about $1.1 billion of Cable One’s secured debt. Bloomberg Law reported October 8 that a $1.25 billion first-lien financing was nearing completion to address the secured debt burden.
The math of the deal itself is part of the dispute. When GTCR exercised a contractual put option in January, Cable One expected to pay $475 million to $495 million for the 55 percent stake; it already owns 45 percent. MBI’s net debt, which Cable One would inherit, is now estimated at $895 million to $925 million, against Cable One’s own roughly $3 billion of net debt at June 30. The equity trades down about 90 percent this year.
GTCR appears to be both seller and prospective lender: one analyst assessment suggested the firm might accept only a partial cash payment for MBI and take a stake in Cable One itself. If the judge sides with CoBank, that structure and the $1.25 billion financing could have to be renegotiated wholesale.