Cable One Announces Private Offering of Convertible Senior Notes

Rhea-AI Summary

Cable One (NYSE: CABO) announced a private offering of $400 million in convertible senior notes due 2026 and $200 million due 2028. The offering is subject to market conditions, with an option for initial purchasers to buy an additional $60 million and $30 million, respectively. Proceeds will finance the acquisition of remaining equity interests in Hargray Acquisition Holdings. The notes are senior unsecured obligations, convertible into cash, common stock, or a combination, and will be offered only to qualified institutional buyers under Rule 144A.

Positive

• Plans to use proceeds for acquisition of Hargray, potentially enhancing market position.
• Convertible notes allow flexibility for future financing and shareholder engagement.

Negative

• Dilution risk for shareholders due to potential conversion of notes into common stock.
• Uncertainty regarding the completion of the Hargray acquisition and regulatory approvals.

Cable One, Inc. (NYSE: CABO) (“Cable One” or the “Company”) today announced the commencement of a private offering (the “Offering”) of $400 million aggregate principal amount of its convertible senior notes due 2026 (the “2026 Notes”) and $200 million aggregate principal amount of its convertible senior notes due 2028 (the “2028 Notes” and, together with the “2026 Notes”, the “Notes”), subject to market and other conditions. Cable One expects to grant the initial purchasers of the Notes an option to purchase up to an additional $60 million principal amount of 2026 Notes and up to an additional $30 million principal amount of 2028 Notes, in each case exercisable within a period of 13 days from the date the Notes are first issued.

Cable One intends to use the net proceeds from the Offering for general corporate purposes, including to finance a portion of the purchase price in connection with the acquisition of the equity interests in Hargray Acquisition Holdings, LLC (“Hargray”) that Cable One does not already own.

In certain circumstances and during specified periods, the Notes will be convertible at the option of the holders into cash, shares of Cable One’s common stock or a combination thereof at Cable One’s election. The interest rate, conversion rate and other terms of each series of Notes will be determined at the time of pricing of the Notes.

The Notes will be senior unsecured obligations of Cable One and will be guaranteed by Cable One’s wholly owned domestic subsidiaries that guarantee its senior secured credit facilities or that guarantee certain of its capital markets indebtedness.

The Notes and the guarantees thereof will be offered in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Notes and the guarantees thereof will be offered only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The Notes, the guarantees thereof and any shares of common stock issuable upon conversion of the Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy the Notes, the guarantees thereof or the shares of common stock issuable upon conversion of the Notes, nor shall there be any sale of the Notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No assurance can be made that the Offering will be consummated on its proposed terms or at all.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This communication may contain “forward-looking statements” that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about the Company’s industry, business, strategy, acquisitions and strategic investments, dividend policy, financial results and financial condition as well as anticipated impacts from, and the Company’s responses to, the COVID-19 pandemic. Forward-looking statements often include words such as “will,” “should,” “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. The Company’s actual results may vary materially from those expressed or implied in its forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by the Company or on its behalf. Important factors that could cause the Company’s actual results to differ materially from those in any forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors, which are discussed in the Company’s Form 10-K for the year ended December 31, 2020 (the “Form 10-K”) as filed with the SEC:

• the duration and severity of the COVID-19 pandemic and its effects on the Company’s business, financial condition, results of operations and cash flows;
• rising levels of competition from historical and new entrants in the Company’s markets;
• recent and future changes in technology;
• the Company’s ability to continue to grow its business services products;
• increases in programming costs and retransmission fees;
• the Company’s ability to obtain hardware, software and operational support from vendors;
• uncertainties as to the timing of the Company’s acquisition of the equity interests in Hargray that it does not already own (the “Hargray transaction”), and the risk that the Hargray transaction may not be completed in a timely manner or at all, including failure to receive any required regulatory approvals (or any conditions, limitations or restrictions placed in connection with such approvals);
• risks that the Company may fail to realize the benefits anticipated as a result of the Hargray transaction;
• business uncertainties that the Company and Hargray will be subject to while the Hargray transaction is pending that could adversely affect the Company’s and Hargray’s businesses;
• risks relating to existing or future acquisitions and strategic investments by the Company;
• risks that the implementation of the Company’s new enterprise resource planning system disrupts business operations;
• the integrity and security of the Company’s network and information systems;
• the impact of possible security breaches and other disruptions, including cyber-attacks;
• the Company’s failure to obtain necessary intellectual and proprietary rights to operate its business and the risk of intellectual property claims and litigation against the Company;
• legislative or regulatory efforts to impose network neutrality and other new requirements on the Company’s data services;
• additional regulation of the Company’s video and voice services;
• the Company’s ability to renew cable system franchises;
• increases in pole attachment costs;
• changes in local governmental franchising authority and broadcast carriage regulations;
• the potential adverse effect of the Company’s level of indebtedness on its business, financial condition or results of operations and cash flows;
• the restrictions the terms of the Company’s indebtedness place on its business and corporate actions;
• the possibility that interest rates will rise, causing the Company’s obligations to service its variable rate indebtedness to increase significantly;
• the Company’s ability to continue to pay dividends;
• provisions in the Company’s charter, by-laws and Delaware law that could discourage takeovers and limit the judicial forum for certain disputes;
• adverse economic conditions;
• fluctuations in the Company’s stock price;
• dilution from equity awards and potential stock issuances;
• damage to the Company’s reputation or brand image;
• the Company’s ability to retain key employees;
• the Company’s ability to incur future indebtedness;
• provisions in the Company’s charter that could limit the liabilities for directors; and
• the other risks and uncertainties detailed from time to time in the Company’s filings with the SEC, including but not limited to the Form 10-K as filed with the SEC.

Any forward-looking statements made by the Company in this communication speak only as of the date on which they are made. The Company is under no obligation, and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise. The Company may not consummate the Offering described in this press release and, if the Offering is consummated, cannot provide any assurances regarding the final terms of the Offering.

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FAQ

What is the amount of the private offering by Cable One?

Cable One is offering $400 million in convertible senior notes due 2026 and $200 million due 2028.

What are the intended uses for the proceeds from the offering?

The net proceeds will be used for general corporate purposes, including financing the acquisition of remaining equity interests in Hargray.

What are the risks associated with the notes offered by Cable One?

There are risks of dilution for existing shareholders and uncertainties concerning the timely completion of the Hargray acquisition.

Who can purchase the convertible senior notes offered by Cable One?

The notes will be offered only to persons reasonably believed to be qualified institutional buyers under Rule 144A.

What is the conversion option for the notes?

The notes are convertible into cash, shares of common stock, or a combination thereof at Cable One's election.