Cable One, Inc. (NYSE: CABO) has announced an amendment to its strategic investment in Mega Broadband Investments Holdings LLC (MBI), providing enhanced timing flexibility for the potential acquisition of full ownership of MBI. Cable One currently holds a 45% stake in MBI, with affiliates of GTCR LLC and MBI management owning the remaining 55%.
As part of the amended partnership agreement, Cable One has paid $250 million to the other MBI equity holders and those same equity holders received 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.
The amended partnership agreement also introduces new arrangements to provide timing flexibility for Cable One's potential acquisition of full ownership of MBI. Cable One now has a new option to call the 55% of MBI it does not already own, exercisable starting in the third quarter of 2025. Additionally, GTCR’s existing option to put the 55% of MBI to Cable One 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.
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 the purchase price payable will range between approximately $410 million and $550 million. Additionally, MBI’s total net indebtedness that will be outstanding at the time it becomes wholly-owned by Cable One is estimated to be approximately $845 million to $895 million.
MBI, a leading provider of broadband services across the Southeast, Northwest, and Mid-South United States, reported total revenues of approximately $320 million for the 12 months ended September 30, 2024, with approximately 226,000 residential and business data customers across a network footprint of approximately 674,000 passings as of September 30, 2024. Following these announcements, the company's shares moved 3.8%, and are now trading at a price of $369.06. For the full picture, make sure to review Cable One's 8-K report.
