CoBank sues to block Cable One’s $480 million Mega Broadband buyout

Investing.com -- CoBank ACB filed a federal lawsuit in New York on Friday seeking an emergency restraining order to block Cable One Inc (NYSE: CABO) from completing its roughly $480 million purchase of a 55% stake in Mega Broadband Investments. The lender, which holds approximately $1.1 billion in Cable One secured credit, alleged the acquisition would deepen the cable operator’s insolvency and unacceptably impair its remaining asset base.

The legal action targets a looming Oct. 9 deadline for Cable One to buy out private equity firm GTCR, which previously exercised a put option forcing the transaction. While Cable One has reportedly been finalizing a $1.25 billion first-lien term loan package with new and existing creditors to fund the payment and refinance debt, CoBank argued in court filings that Cable One’s own disclosures value the equity stake at just $54 million.

Against that backdrop, Cable One shares plummeted around 33% in Friday trading, completely erasing a rally sparked a day earlier by reports of its emergency debt financing package. Investors quickly shifted focus from the company's prospective liquidity relief to the severe valuation discrepancies and insolvency claims highlighted in the lawsuit.

Ultimately, the dispute underscores the operational and balance sheet headwinds confronting mid-tier broadband providers as legacy cable models face continuous subscriber pressure. Market participants will now closely watch whether the federal court intervenes before the purchase deadline or forces Cable One to restructure its commitments.

Original Article

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