Drahi’s Altice Says Creditors Must Take Cuts to Reach Targets

Irene García Pérez and Benoit Berthelot, Bloomberg News

The Altice headquarters during a protest over pay in Lisbon, Portugal, on Friday, Jan. 26, 2024. Altice Portugal is up for sale, with Saudi Telecom Co. among the potential buyers, Bloomberg reported last month. , Photographer: Zed Jameson/Bloomberg

(Bloomberg) -- Executives at billionaire Patrick Drahi’s Altice set more aggressive leverage targets and said its creditors will be on the hook to help the embattled French telecommunications company meet them, triggering a plunge in its bonds.

Altice France is looking to reduce its leverage below 4-times earnings before interest, taxes, depreciation, and amortization, the group’s executives said in call with analysts on Wednesday. Previously, the company said it was targeting 4.5-times earnings.

On the call, finance executives including Chief Financial Officer Malo Corbin said debt holders will have to participate in “discounted transactions” to help the company cut leverage. Altice France is racing against the clock to reduce a debt pile that’s becoming costly to refinance and has agreed to two disposals — its media and data center businesses — since Drahi said in August that he would do “whatever it takes” to delever.

Read More: The Corruption Probe Rocking Altice Tycoon’s Empire: QuickTake

The company is still evaluating how to use the proceeds of those asset sales, Altice executives said, and are looking for a definitive solution to the capital structure that would require creditors to accept a haircut.

Altice France’s bonds plunged after the company’s earnings call. The most notable move was that of the €1.3 billion ($1.4 billion) first lien note due in May 2027, which plummeted 21 cents on the euro to 48 cents, the biggest drop since issuance in 2020, according to data compiled by Bloomberg.

French-Israeli tycoon Drahi has been looking for ways to cut his group’s debt pile of more than $60 billion. Altice France, including carrier SFR, has about €1.8 billion of debt coming due in 2025 alone, and €24.3 billion due in total.

Altice France signed last week an agreement to sell Altice Media, including news channel BFM TV, for €1.55 billion to France’s billionaire Saadé family. Altice France also sold a 70% stake in its data center business in November for €535 million to Morgan Stanley Infrastructure Partners. The next disposals could be stakes in its XpFibre fiber business or cell carrier La Poste Mobile, the executives said.

A corruption investigation adds to the scrutiny of Drahi’s group. Earlier this month, French prosecutors opened a preliminary probe into potential corruption linked to Altice, Bloomberg News reported, months after the arrest of co-founder Armando Pereira and other business associates in Portugal.

Corbin said that the preliminary investigation was triggered by Altice France and SFR “proactively” asking French authorities to investigate allegations relating to the companies’ relationship with suppliers targeted by Portuguese prosecutors who were also active in France. The only way for the French authorities to review findings from Altice’s own internal investigation was to open a case, he added.

Altice France reported a stable revenue for the full year, and Ebitda of €3.92 billion, down 4.3% from a year earlier. For 2024, Altice guided that a reduction in capital spending would not be sufficient to offset higher interest costs. It is expecting revenue decline due to “the continued slowdown of construction activity and the residential market in France remaining competitive.”

(Updates with additional details throughout)