CABO Cable One Inc

 

On September 28, 2020, Cable One, Inc. (the “Company”) entered into an Equity Purchase Agreement, dated as of September 28, 2020 (the “Purchase Agreement”), by and among the Company; Mega Broadband Investments Holdings LLC, a Delaware limited liability (“MBI”); Mega Broadband Splitter, LP, a Delaware limited partnership; Mega Broadband Blocker, Inc., a Delaware corporation (“Blocker”); and GTCR Fund XII/C LP, a Delaware Limited Partnership (“Blocker Seller”). MBI provides high-speed data, television, and voice services to residential and business customers in rural markets in 16 states under the Vyve Broadband brand and is owned by funds affiliated with GTCR LLC, a leading private equity firm based in Chicago.

 

Under the terms of the Purchase Agreement, the Company will pay a purchase price currently estimated to be $574.1 million in cash, a portion of which will be paid to Blocker Seller for existing equity interests in Blocker, and the remainder of which will be paid to MBI for newly issued membership interests in MBI. The purchase price is subject to adjustment for certain new debt incurrences and transaction expenses. Giving effect to the transactions contemplated by the Purchase Agreement, including the distribution of the proceeds paid to MBI to the existing equity holders of MBI, the Company will hold, through its direct and indirect ownership, an approximate 45% equity interest in MBI immediately following the closing. The Company expects to finance the transactions through cash on hand.

 

The closing of the transactions contemplated by the Purchase Agreement is subject to customary conditions, including the accuracy of the representations and warranties made by the parties and the absence of regulatory impediments. The Company currently anticipates that the transactions will be completed during the fourth quarter of 2020.

 

On the closing date, as a condition to the closing of the transactions contemplated by the Purchase Agreement, the Company, MBI, and certain investors affiliated with Blocker Seller (the “GTCR Investors”) will enter into an amended and restated limited liability company agreement of MBI (the “Operating Agreement”) setting forth certain governance and other rights of the members of MBI. Under the Operating Agreement, the Company will have the right, but not the obligation, exercisable any time between the first quarter of 2023 and the second quarter of 2024, inclusive, to acquire all but not less than all of the direct and indirect membership interests in MBI not then held by the Company from the other members of MBI (the “call right”). If the call right is not exercised, the GTCR Investors will have the right, but not the obligation, exercisable during the third quarter of 2025, to sell (and to cause all members of MBI other than the Company to sell) to the Company all but not less than all of the direct and indirect membership interests in MBI not then held by the Company (the “put right”). The purchase price to be applied upon the exercise of the call right or the put right, as applicable, will be calculated under a formula to be set forth in the Operating Agreement.

 

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement. The representations, warranties and covenants in the Purchase Agreement were made solely for the benefit of the parties to the Purchase Agreement for the purpose of allocating contractual risk between those parties and do not establish such matters as facts. Investors should not rely on the representations, warranties and covenants as characterizations of the actual state of facts or condition of the Company, MBI or any of their respective subsidiaries or affiliates.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This communication may contain “forward-looking statements” that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about the Company’s and MBI’s industry, businesses, strategies, dividend policies, financial results and financial conditions as well as anticipated impacts from the COVID-19 pandemic on the Company’s and MBI and future responses. Forward-looking statements often include words such as “will,” “should,” “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. The Company’s actual results may vary materially from those expressed or implied in its forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by the Company or on its behalf. Important factors that could cause the Company’s actual results to differ materially from those in its forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors , certain of which are discussed in the Company’s latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the period ended June 30, 2020 (the “Second Quarter 2020 Form 10-Q”) as filed with the Securities and Exchange Commission (the “SEC”):

 

 

 

 

Any forward-looking statements made by the Company in this communication speak only as of the date on which they are made. The Company is under no obligation, and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise.