Court order temporarily blocks Cable One's purchase of 55% stake in Mega Broadband
Key Facts
The U.S. District Court for the Southern District of New York temporarily blocked Cable One's purchase of the remaining 55% stake in Mega Broadband under an order issued on October 9, 2026, according to a company statement. The injunction came as Cable One seeks to arrange financing transactions aimed at addressing $2.45 billion in existing obligations and near-term debt maturities. The proposed refinancing also aims to provide liquidity for investment in the company's business, according to the statement. The amount represents the obligations and maturities the proposed transactions seek to address, while completion of the financing remains contingent on resolving the injunction blocking the purchase. The court order temporarily prevents completion of the stake acquisition, with Cable One announcing its intention to contest the lawsuit.
The lawsuit was filed by CoBank, a lender under Cable One's existing credit agreement, seeking to block completion of the acquisition, according to the company's update on the pending transaction. The lender's complaint alleges that payment of the purchase price would constitute a constructive fraudulent transfer of assets. The allegation concerns payment for the acquisition Cable One seeks to complete, according to the company's account of the lender's complaint. In response to the lawsuit, Cable One said it considers CoBank's claims legally meritless. The company said in its statement that it would "vigorously contest the claims," setting out its position on the legal basis for the lender's request to block the purchase.
The financing discussions involve GTCR, certain existing lenders and a consortium of private lending institutions, according to an earlier Cable One statement on the advanced talks. The anticipated transactions include extending the maturity of the existing revolving credit facility while reducing its size under the proposed arrangements. They also include settlement of the put option and full repayment of the term loan known as B-4, according to the company's description of the plan's components. Chief Executive Jim Holanda said the proposed financings aim to "strengthen Cable One's overall financial position." The transactions under negotiation combine changes to the revolving facility, settlement of the put option and repayment of the loan, alongside addressing obligations and maturities and providing liquidity for investment in the business.
The purchase of the remaining stake follows Cable One's existing ownership of 45% of Mega Broadband before the proposed acquisition, according to the agreement announcement. On January 2, 2026, GTCR investors exercised their contractual put option to require Cable One to purchase the stake it does not own. When announcing the agreement, Cable One estimated the purchase price for that stake at approximately $475 million to $495 million. That range was an estimate of the consideration for the remaining stake when the agreement aimed at transferring full ownership to Cable One was announced. In the same announcement, the company projected Mega Broadband's net indebtedness at the transfer of full ownership at approximately $845 million to $895 million.
Cable One originally expected to complete the acquisition on October 1, 2026, according to the announcement of the agreement to purchase the remaining stake. It later agreed with GTCR to extend the deadline for completing the purchase to October 9, 2026, the date the temporary injunction was issued. On the operating front, the company reported revenue of $348.9 million in the second quarter of 2026. That compared with revenue of $381.1 million in the corresponding period a year earlier, according to its quarterly earnings statement. Cable One attributed the decline in residential internet data revenue primarily to a decrease in subscribers to those services, as part of its explanation of operating performance during the quarter.
Under the acquisition agreement, Cable One is not required to complete the stake purchase while a legal impediment to closing remains in effect, according to its transaction update. The proposed financing remains contingent on resolving this injunction, while the company intends to continue contesting the lender's claims. At the time of the update, Cable One had not entered into definitive financing agreements for the transactions it is negotiating with the parties involved in the talks. It also said it could not guarantee completion of the proposed financing transactions, despite ongoing discussions concerning the revolving facility, put option and term loan. Under Mega Broadband's debt schedule, the term loans referenced in the acquisition agreement announcement mature in November 2027.