Cable One Taps Truist for Debt Deal as Bond Payments Loom

Cable One Inc. is in talks with Truist Financial Corp. to arrange new financing that would help refinance maturing convertible bonds and fund its acquisition of the remaining 55% stake in Mega Broadband according to Bloomberg. The company faces a $575 million bond maturity in March, and a potential $1 billion debt financing is being explored to address this obligation as reported.

The proposed refinancing and acquisition come as Cable One attempts to strengthen its competitive position in a challenging broadband market. The company recently finalized its purchase of GTCR's stake in Mega Broadband after the private equity firm exercised its put option according to Bloomberg.

Cable One's need for additional debt reflects broader market pressures, including stiff competition from fixed wireless and wireline providers. Moody's Ratings cut the company's credit rating to B1 from Ba3 on Dec. 22, citing an expected rise in leverage from the Mega Broadband acquisition as Bloomberg reported.

What Is the Scope of the Proposed Debt Financing?

Cable One could seek around $1 billion in the debt markets to refinance the $575 million in convertible bonds and fund the purchase of GTCR's stake in Mega Broadband according to Bloomberg. The transaction would allow Cable One to gain full ownership of Mega Broadband, which it currently controls partially. The company has also stated it may use its $1.25 billion revolving credit facility to fund the acquisition as reported.

Mega Broadband generated about $310 million in revenue for the 12 months ending last September, according to a statement from Cable One according to Bloomberg. The company has estimated the value of the remaining stake at between $475 million and $495 million as reported.

Why Did Cable One Pursue This Acquisition?

Cable One said that full ownership of Mega Broadband will provide a larger, more geographically diversified operating footprint in attractive markets. It also cited potential efficiency gains from increased scale according to Bloomberg. The acquisition follows a period of intense competition in the broadband industry, which has limited pricing power and led to customer attrition as reported.

The decision to acquire the remaining stake was influenced by GTCR's put option exercise, which gave the private equity firm the right to sell its shares according to Bloomberg. Cable One has not yet finalized the financing terms, and discussions with Truist remain in early stages as reported.

What Are Analysts Watching for Next?

Investors and analysts are closely watching how Cable One manages its debt obligations and whether the acquisition will deliver the expected efficiency gains. The company's leverage ratio is a key concern, especially given the credit downgrade from Moody's according to Bloomberg.

A successful refinancing would provide short-term relief from near-term bond maturities, but long-term performance will depend on the ability to integrate Mega Broadband and improve profitability as reported. Market observers are also monitoring the impact of industry competition on Cable One's customer base and pricing strategy according to Bloomberg.

Cable One has not yet disclosed whether it will issue new debt, refinance existing bonds, or use a combination of funding sources. Truist has been assessing interest from existing bondholders in the proposed refinancing as reported.

Representatives for both Cable One and Truist declined to comment on the potential deal according to Bloomberg.