Cable One Amends Mega Broadband Strategic Partnership

Cable One announced that it has amended the terms of its strategic investment in Mega Broadband 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 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.

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:

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.

Source: Cable One media announcement