US-based Cable One plans to raise US$550m in debt in connection with its upcoming spin-off from parent company Graham Holdings.
The new debt will consist of US$450m of senior unsecured notes and a senior secured term loan facility, the parent company…
US-based Cable One plans to raise US$550m in debt in connection with its upcoming spin-off from parent company Graham Holdings.
The new debt will consist of US$450m of senior unsecured notes and a senior secured term loan facility, the parent company said in a statement.
Graham will not provide any kind of credit support for either the notes or the loan.
Cable One, the tenth-largest cableco, intends to use the proceeds and available cash to pay a one-off cash dividend to Graham.
Graham, which owns five TV stations and educational publisher Kaplan, announced last November that it planned to spin off Cable One, which has been named as a possible acquisition target for aspiring cable consolidators such as French billionaire Patrick Drahi’s telecoms group Altice.
Moody’s has assigned Cable One first-time corporate family and probability of default ratings of Ba3. It has rated the proposed US$450m notes, due 2022, B1.
The rating agency said it expects Cable One to increase its debt-to-EBITDA ratio above 3.0x within four years. Upon separation from Graham, it expects Cable One’s initial debt-to-EBITDA ratio to stand at 1.69x based on its plans to raise US$300m of first lien credit facilities, including an undrawn US$200m revolver, and issue the US$450m of new notes. However, Moody’s noted that the cableco’s management intends to increase leverage to 2.5x-3.5x with additional debt issuances to fund acquisitions and pay-outs to shareholders. The company’s relatively small scale and acquisition strategy risk also impacted the ratings, the agency said.
Cable One, which reported revenues of US$815m for 2014, provides traditional and newer video services, including digital and high-definition TV and video-on-demand, as well as internet access and phone service. It mainly serves smaller cities in the Midwest, southern and northern US and had about 490,000 thousand high-speed data, 450,000 video and 150,000 phone subscribers at the end of 2014.
After the spin-off, the cableco’s initial shareholders will mirror those of Graham, with Donald Graham and Southeastern Asset Management among the largest investors.
