Judge Blocks Cable One's $480M Mega Broadband Deal After Lender Lawsuit
CABO is trading near its 52-week low of $9.84 (9.8% above the low) on elevated volume (6.2× avg).
Summary
A federal judge temporarily blocked Cable One from spending $480 million to buy the remaining 55% of Mega Broadband Investments after lender CoBank sued to stop the deal. CoBank, holding about $1.1 billion of Cable One's debt, argues the acquisition is a fraudulent transfer that would push the company deeper into insolvency. The judge ordered Cable One to show cause why the purchase should not be barred pending a hearing. Shares plunged more than 27% Friday to $11.14 after the lawsuit was filed, reversing Thursday's 16.4% jump on news of a proposed $1.25 billion first-lien term loan. Cable One says the Mega Broadband stake is worth no more than about $54 million after accounting for a $426 million liability, while CoBank says the financing's all-in costs are about 17% through September 2029. The company is contractually obligated to buy the stake after GTCR exercised its right to sell in January, and the acquisition was expected to close Friday. This follows the 8-K filed October 2 extending the closing date to October 9 and the Seeking Alpha report earlier today on the lawsuit. The temporary block and the sharp share decline materially change the risk profile for the pending acquisition and the company's ability to avoid bankruptcy.
At the time of this announcement, CABO was trading at $10.80 on NYSE in the Trade & Services sector, with a market capitalization of approximately $63.2M. The 52-week trading range was $9.84 to $172.06. This news item was assessed with negative market sentiment and an importance score of 9 out of 10. Source: Dow Jones Newswires.