Cable One is grappling with significant financial challenges as it attempts to refinance debt and complete the acquisition of Mega Broadband Investments Holdings LLC (MBI). The company is considering seeking approximately $1 billion in debt markets to refinance $575 million in bonds maturing in March and fund the MBI purchase. Truist Financial is assisting Cable One in gauging interest from existing bondholders for this new transaction. KeyBanc analyst Nispel estimates that if Cable One assumes MBI's debt, it would reduce the financing needed by $895 million to $925 million, but the company would still require $480 million for the acquisition, potentially impacting free cash flow due to higher interest rates.
Cable One's preliminary second-quarter 2026 results indicate a challenging period, with expected net residential broadband subscriber losses ranging from 16,000 to 18,000, slightly worse than analyst expectations. Average monthly revenue per unit for residential data is projected to be between $80.00 and $81.00, and revenues are anticipated to be in the range of $346 million to $352 million. The company reported cash and equivalents of $166.2 million, gross debt of $3.05 billion, and net debt of $2.89 billion as of June 30, 2026.
A key aspect of Cable One's strategy involves an exchange offer for MBI's senior secured term loans. The company had initially launched an offer to MBI lenders to exchange their term loans for a combination of cash and new first lien "first out" and "second out" term loans of Cable One. However, Cable One is now considering not consummating this MBI Term Loan Exchange Offer and instead leaving MBI's senior secured term loans in place without providing new credit support. This decision, as Nispel noted, may suggest that Cable One cannot secure more attractive financing for the MBI acquisition compared to the existing debt, further highlighting the pressure from creditors and the potential for higher debt costs.
Cable One currently owns a 45% stake in MBI and plans to acquire the remaining 55%. The purchase price for this remaining stake is expected to be between $475 million and $495 million, based on MBI's adjusted earnings and total net outstanding debt, which is estimated to be between $845 million and $895 million. The MBI acquisition is expected to close on or before October 1, 2026. Cable One also plans to incur new first lien "second out" indebtedness and refinance certain existing secured indebtedness, including replacing revolving commitments and term loans under its current credit agreement with a new $1.0 billion revolving credit facility with a 5-year maturity.
