(Bloomberg) -- Altice France and a group of secured creditors ended their first round of discussions without reaching a deal over how to restructure the company’s €24.4 billion ($25.7 billion) pile of debt, according to a statement on Thursday.
The discussions between the embattled French telecommunications firm and the steering committee of its secured lenders were about finding ways to cut the company’s leverage.
Among the sticking points were the cost of debt and the amount of equity the company’s billionaire owner Patrick Drahi should give up to creditors, according to the statement.
In its latest proposal, Altice contemplated exchanging its secured debt for a €2.6 billion cash payment, €13.7 billion of new secured debt instruments with maturities ranging from 2029 to 2031, and an aggregate equity stake of 18% in common shares. The debt was expected to have a weighted average cost of 6.5% across relevant instruments.
On the other hand, the creditors’ latest counterproposal included the same cash payment that the company floated: €14.4 billion of secured debt with an average cost of 7.5% on certain instruments, and an equity stake of 34%, according to the statement.
Other material economic terms contained in the final proposals were related to governance rights, enhanced documentary terms — including a significant tightening of various covenants — and enhanced collateral.
For the unsecured creditors, the company is proposing a 20% recovery including a cash payment and new unsecured debt instruments. They would also receive a common equity amount to be determined.
Altice France told creditors in March that they would need to take haircuts in order to achieve a leverage of below four times its earnings, from over six times. The company has €20.2 billion of secured debt, with the rest being unsecured.
Creditors organized shortly after, Bloomberg reported earlier, with the ad-hoc group of secured creditors formed by 17 members with different interests based on the maturity of their holdings or the price at which they bought the debt, according to people familiar with the matter.
Altice has been looking to sell assets as part of the plan to delever the business. One of the assets that remains to be sold is its stake in French cable company XpFibre. On Thursday, Altice said it informed the creditors its equity interest in XpFibre is held in a company outside of the reach of creditors.
The company is due to report third quarter earnings on Nov. 27.
Below are details of the latest discussions, at a glance:
(Updates to include earnings report day. An earlier version corrected the proposal for unsecured creditors.)
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