About two months after saying it was pursuing the creation of a new joint venture to build out fiber networks within and adjacent to its existing footprint, Cable One officially unveiled the effort -- Clearview Fiber -- adding that it has signed on investment firms GTCR, Stephens Capital and The Pritzker Organization as financing partners for the JV.
Cable One said it was pursuing the JV -- which includes its Clearwave Communications fiber assets and certain fiber assets of Hargray Communications -- in November. In a Securities and Exchange Commission filing at the time, Cable One said the JV also included certain unaffiliated third-party investors, but declined to name them.
According to a press release January 3, Cable One said the Clearwave Fiber venture is committed to “provide fast and reliable connectivity via FTTP [fiber-to-the-premises] internet to underserved markets and will allow for more rapid expansion of fiber internet to homes and businesses in small cities and big towns.”
Cable One owns a majority of the JV, and said investors will make “substantial cash investments” to support its expansion. Clearwave Fiber will be led by executive chairman Michael Gottdenker and CEO David Armistead, both of whom were part of Hargray’s executive leadership team from 2007 until its 2021 sale to Cable One.
“This strategic investment will help accelerate the deployment of fiber-based broadband services to a range of markets, including underserved areas of the country,” Gottdenker said in a press release. “Our team is motivated by our shared core values of customer service and improving lives through connectivity and is excited to bring fast and reliable Clearwave Fiber broadband to homes and businesses across the country. We are thrilled to welcome GTCR, Stephens, and TPO to the Clearwave Fiber family and look forward to our continued partnership with Cable One.”
GTCR has been a long-time investor in the cable space and has been a frequent partner of Cable One in various deals. In 2019 it purchased Vyve Broadband with Mega Broadband Investments, selling a 45% interest in the company to Cable One about a year later for $547.1 million. GTCR formed Rural Broadband Investments in 2013, buying several small cable operators -- including New Wave Communications -- and was sold to Cable One in 2017.
Pritzker and Stephens Capital were investors in Hargray, which Cable One bought in 2021.
Cable One did not quantify how large the investment in Clearwave Fiber will be, but said its own contributions to the JV represent about 3% of its consolidated revenue in Q3 2021. According to its financial statements, Cable One had Q3 total revenue of $430.2 million, meaning its investment in the Clearwave JV is about $13 million.
“We look forward to supporting and sharing in Clearwave Fiber’s growth over the coming years while remaining focused on our primary business, increasing penetration rates, integrating recently acquired companies and driving higher margins and greater free cash flow,” Cable One CEO Julie Laulis said in a press release. “We did not take lightly our choice of partners in this transaction and are excited to be working with like-minded individuals who share our core principles.”
Bank Street Group acted as lead financial advisor to Cable One, and Ernst & Young advised on the financial and operational carve-out of Clearwave Fiber. Cravath, Swaine & Moore LLP and Cahill Gordon & Reindel LLP acted as legal advisors to Cable One. Kirkland & Ellis LLP, Davis Polk & Wardwell LLP and Covington & Burling LLP acted as legal advisors to the investors on this transaction. ■
