Altice is facing resistance from creditors of its French telecoms arm after proposing cuts to the value of their debt, sparking a clash between the heavily indebted group and bondholders.
The group has been under pressure due to increased interest rates and the arrest of Armando Pereira, a long-time associate of Drahi, in a corruption probe. These challenges have prompted Drahi to pursue asset sales and refinancing efforts.
Bondholders of Altice France, represented by debt restructuring advisers Houlihan Lokey and law firm Millbank, are mobilizing to challenge the proposed debt reductions.
The move comes after management disclosed plans for aggressive debt reduction targets and potential impairments during a bondholders’ call.
Although Altice did not respond to requests for comment, sources familiar with the matter revealed that the creditor group had been formed before the recent developments but was invigorated by management’s statements.
Comprising mainstream asset managers and distressed debt hedge funds, the group holds secured and unsecured debt of Altice France. Altice France’s bond prices had surged following news of asset sales, but management’s announcement of stricter debt reduction targets dampened investor sentiment.
During the call, Altice executives outlined a new target of reducing net debt to “well below 4 times” adjusted earnings, suggesting that creditor participation in discounted transactions would be necessary to achieve this goal.
The revelation unsettled bondholders, who anticipated a more cooperative approach from Altice to address its substantial debt load. Altice France’s unsecured bond prices plummeted by over 20 percentage points during the call, prompting concerns among investors.
While Altice retains significant flexibility in selling assets without fully repaying debt, creditors remain hopeful of influencing a more favorable outcome.
Comparisons were drawn to a recent scenario involving US telecoms firm Dish, where creditors successfully opposed a stringent debt restructuring through collective action.
Altice France faces significant debt obligations, with over €20 billion in secured debt and €4 billion in unsecured debt. Given the uncertainties surrounding the fate of unsecured bonds in French restructurings, creditors are cautiously negotiating with the telecom giant.
