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(SOURCE: IVAN KMIT/ALAMY STOCK PHOTO)
Cable One's pending deal to acquire the chunk of Mega Broadband Inc. (MBI) it doesn't already own remains in a holding pattern after a judge called on Cable One and CoBank – a lender that caused the deal to be put on pause in the first place – to find a parcel of common ground.
Cable One's agreement to retain the 55% of MBI it doesn't already own for $480 million is on pause after CoBank submitted an urgent request for a New York district court to temporarily halt the deal. CoBank is concerned that Cable One is on the brink of bankruptcy and would be unable to repay its debts if the transaction were allowed to proceed. CoBank holds about $1.1 billion in secured credit issued to Cable One. Within hours of CoBank's request, the court ordered to pause the transaction late last week just as it was about to close.
Cable One then disputed CoBank's characterization of the operator's financial situation and its ability to make payments on time, adding that CoBank and other lenders would have remedies even if Cable One missed an interest or principal payment. Cable One also argued that the temporary restraining order was entered prior to a hearing or a court appearance by the operator as it made progress toward finalizing transactions with GTCR (the private equity firm that formed MBI) and certain existing and private lenders.
Related:Cable One urges judge to unblock Mega Broadband deal
As such, Cable One has asked the court to dissolve the TRO, believing in part that further delays will put an agreement to secure a loan of $1.3 billion in jeopardy. Cable One intends to use that loan to repay revolving debt linked to the pending deal and for "additional runway to execute on its business priorities."
"For all its bluster about Cable One's purported insolvency or near‑insolvency, CoBank does not allege – nor could it – that Cable One has missed an interest or principal payment or will do so imminently," Cable One told the court.
Judge to Cable One and CoBank: Figure out a timetable
For now, the court is keeping everything on pause, and it's not clear how long the Cable One-MBI transaction will remain in limbo.
On Tuesday (October 13), Victor Marrero, a judge for the US District Court for the Southern District of New York, ordered that Cable One and CoBank work out a pair of timetables.
Specifically, he's ordered them to submit an agreed-upon briefing schedule and hearing date for both CoBank's complaint (technically an order to show cause) and Cable One's motion to dissolve the TRO.
Cable One declined to comment on what kind of timetable it intends to pursue. CoBank has been asked for comment.
Related:Judge halts Cable One-Mega Broadband deal as it was about to cross the finish line
Given Cable One's concerns about its loan agreement and its desire to get the MBI transaction completed, it's clear Cable One would like to get those dates scheduled as soon as possible.
After rebounding a bit on Tuesday, Cable One shares dropped $2.77 (-23.61%) to $8.96 each in Wednesday midday trading. Cable One shares are down 92% year-to-date.
About the Author
Senior Editor, Light Reading
Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X, LinkedIn and Bluesky.
Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.