Call/put agreement, call ends by Q2 2024; in-between period (Q2 24-Q2 25) MBI can do whatever they want, they have control over the company;afterwards have the right to "put" by end of Q2 25. Customary closing things will make the transaction happen late 25 and early 26. Revolver can afford the transaction, does not need to tap the capital market. Put into the position, will stay within 2.5-4.5x (currently 3.8x, will use the future quarters to push the leverage down further). EBITDA margin higher due to less video customers (more of a mix-shift thing) compared to high speed date. Outlook doesn't look better for video customers.
Julie has dinner with MBI's executives regularly on Mondays.
MBI 45% 574mm back in 2020.
1). MBI growing EBITDA double digit, broad band (less penetrated) growth and ARPU growth. Integration will realize operational and tax synergies. MBI revenue is 320mm (discloed in recent earnings call), EBITDA margin lower, in the 40's.
Synthetic hedges that fix the interests (third party does that so not visible on CapitalIQ). SOFR+300% is rating agency's figure for incremental debt. Late 26's first maturity coming due, zero coupon bonds (525mm dollars). 4.25% is weight average cost of debt right now. Confident in ability to serve the dividend less than 75mm. 1.1 billion unconsolidated assets on B/S. No serious issue with debt servicing since asset divestiture is always a possibilty.
Fixed-wireless access competition is part of the reason pricing lowered, but more importantly strategy had been going to the premium customers in repsecive markets. In between time has been creating excess capacity in network, more cost-effective way to serve customer, has large opportunity in the 'value segment' due to lower penetration and hence greater opportunity. Tries to effectively segment these customers and not to cannibalize the base. Response to competition is tactical, not to every competitor, but to PE funded competitors coming to their next capital raise cycle in a high interest rate cycle, and has been effective in stopping them and they retrenched and even upper their ARPU. Digital infrastructure capital poured into the space by allocators during Covid which made the landscape unfavorable. Thought could create value better independently, but consider all options.
Regret losing Tom, lead independent director. Shareholders believe Tom was overboarded (institutional investors follow black and white standards, for one year he did not get the majority vote and board kept him on, but next year would have to let him step down). When Tom left, bought additional 5mm dollars worth of shares as a vote of support.
Disclosure: No position long or short.