Judge temporarily blocks Cable One's $480 million deal
A federal judge temporarily barred Cable One from spending $480 million to acquire the remaining stake in Mega Broadband Investments after CoBank sued to stop the transaction. Cable One shares fell more than 27% after the lawsuit.
By Alicia McElhaney and Samantha Kroontje A federal judge temporarily blocked Cable One from spending $480 million to acquire the remaining stake in Mega Broadband Investments after lender CoBank sued Cable One on Friday to stop the transaction. S. District Judge J. Paul Oetken ordered Cable One to demonstrate why it shouldn't be barred from purchasing the 55% stake in Mega Broadband it doesn't already own, pending a hearing on CoBank's request.
The lender argued in its lawsuit that financing for the deal would hinder Cable One's ability to repay its creditors. A spokesperson for Cable One declined to comment Friday afternoon. Cable One is contractually obligated to purchase the remaining stake in Mega Broadband it doesn't own after private-equity firm GTCR exercised its right to sell in January. The acquisition was expected to be completed by Friday.
S. 25 billion new first-lien term loan from new and some existing lenders, WSJ Pro Bankruptcy reported Thursday. 1 billion of Cable One's debt under a revolving credit facility and term loans. Cable One carries an additional $2 billion in outstanding debt, according to the lawsuit.
38 on Thursday after news of the proposed new financing. CoBank said the financing's all-in costs, including its interest rate, are about 17% through September 2029. The deal makes any future refinancing difficult and "dooms" the company to a negotiated restructuring in which lenders forgo repayment or it files for bankruptcy, CoBank said. 25 billion financing that could help stave off a bankruptcy filing, people familiar with the matter said.
The company would be better off filing for chapter 11, which would allow it to address the debt burden without spending $480 million for the acquisition, the people said. Cable One has said the Mega Broadband stake it intends to purchase is effectively worth no more than about $54 million after accounting for a $426 million liability associated with the deal, according to CoBank's lawsuit. Cable One's shareholder equity and GTCR's investments would likely be extinguished if the company were to file for bankruptcy. 1 million residential and business customers in 24 states, according to its website.
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