Altice International Shifts Assets From Lenders, Raises Debt
(Bloomberg) — Altice International moved two of its units out of creditors’ reach and took on new debt from one in an aggressive move to stabilize its finances.
The telecommunications provider has designated Altice Portugal SA, which holds all of the company’s operations in Portugal, and Altice Caribbean Sarl, which has its operations in the Dominican Republic, as unrestricted subsidiaries, according to a statement on Friday.
The units are therefore not subject to the rules of existing financing agreements. Instead, they are free to borrow money, sell assets or pay dividends without needing approval from lenders.
At the same time, one of Altice Portugal’s divisions raised 750 million euros ($870 million) in new debt to pay Altice International’s upcoming obligations as well as for general working capital purposes, the statement said.
According to the note, the company also flagged the possibility of taking on additional debt of €2 billion at the Altice Portugal level, which would allow it to further strengthen its liquidity position.
Altice International’s move — the so-called drawdown — is one of several aggressive tools borrowers and owners can use to raise money as they struggle with a growing pile of debt.
The company is looking at various options to deal with its €8.7 billion net debt pile.
“Altice founder Patrick Drahi’s latest asset Jenga game leaves Altice International creditors in a precarious position and facing a restructuring scenario,” wrote Aidan Cheslin, head of European credit research at Bloomberg Intelligence. The decision to designate core Portuguese and Caribbean assets as unrestricted leaves “an annual net debt/EBITDA ratio of 26x to the remaining restricted group (primarily Israel).”
Altice International’s 5.75% dollar-denominated bonds due August 2029 fell more than 7 cents on the dollar to less than 67 cents on the dollar following the announcement, according to Trace pricing data.
Creditors organized before possible debt negotiations with the company.
The statement stated that three independent members have been added to Altice International’s board of directors and that Altice Caribbean is now held by a direct subsidiary of Altice Group Lux Sarl.
The telecommunications firm also announced on Friday that it is conducting a strategic review of its asset portfolio and will consider some potential divestitures in the coming years.
The company announced its third quarter results, indicating a 12.1% decline and a 4.2% increase in revenues on a yearly basis. The company said profits have been impacted because its currently growing revenue streams have lower margins. Moreover, Altice International was struggling with higher operating costs.
(Analyst commentary has been added to the eighth chart, bond pricing has been added to the ninth chart, and details about earnings have been added to the thirteenth chart.)
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