Altice collectors brace for subsequent showdown with Patrick Drahi | USAEMALL.com

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Altice bondholders have formed an alliance to bolster their position ahead of the next round of restructuring of Patrick Drahi’s heavily indebted telecoms empire, just two months after the billionaire struck a €24bn deal with creditors of his French business.

Investment firms holding about 85 per cent of the €8.2bn of top-ranking debt at Altice International have signed a co-operation agreement to prevent creditors from being picked off through side deals, even though the company has said no talks are imminent.

Drahi, a Franco-Israeli telecoms mogul whose sprawling group borrowed more than $60bn of debt in an era of cheap money that now needs to be renegotiated, in late February struck a deal for Altice France that involved handing over a 45 per cent stake in the company to creditors in exchange for a substantial debt writedown. 

While Altice France’s management angered bondholders a year ago by raising the prospect of aggressively shifting assets away from them, the restructuring negotiations concluded amicably, with creditors set to profit if Drahi is able to sell off assets in line with expected valuations.

However, some analysts and investors believe there is a greater risk of asset stripping for bondholders at Altice International than at Altice France, because specific quirks of French law prevented Drahi from taking the most aggressive course of action.

Altice International houses the group’s assets outside of France and the US, with operations in Portugal, Israel and the Dominican Republic.

Some large investment firms that played a significant role in the Altice France restructuring — such as Pimco and Elliott Management, the two largest bondholders in the French process — have shied away from getting involved in Altice International.

London-based credit fund Sona Asset Management is the largest creditor at Altice International, according to people familiar with the matter, followed by PGIM, the asset management arm of the American life insurance firm Prudential Financial. 

The creditor group, which is advised by US law firm Gibson Dunn, also includes large asset managers such as Invesco and BlackRock, alongside hedge funds such as King Street Capital Management and Arini Capital Management.

One large holder of Altice International’s debt said that while the bondholder group was wary of manoeuvres aimed at shifting assets away from them, it appeared that Drahi was again looking to strike a consensual deal with creditors if possible. 

Separately, US hedge fund GoldenTree Asset Management is one of the largest holders of Altice International’s €675mn of unsecured bonds, the people added. These lower-ranking bonds are trading at just 35 cents on the euro, suggesting bondholders are braced for heavy losses.

Altice said that restructuring talks at its international business were not on the “2025 agenda”, with “absolutely no urgency at all” on the maturities of its debt.

Substantial loans that Altice International made to related parties could draw scrutiny from bondholders as restructuring negotiations kick off, with more than €4.5bn of loans outstanding to its parent company Altice Luxembourg at the end of 2024.

Altice International also previously lent about €600mn to an investment vehicle Drahi used to build a 24.5 per cent stake in BT. This loan was not repaid when Drahi sold his stake in the London-listed telecoms company last year, however, and was instead shuffled so the money is now owed from another Altice entity.

Bankers, bondholders and rival executives believe that Drahi is potentially looking to exit his home market of France entirely, with mobile operator SFR an attractive target if competition regulators allow consolidation to take place. Bouygues, Xavier Niel’s Iliad and Orange are the other major operators in the French market.

SFR would probably have to be broken up to appease competition regulators, which may still veto any deal that raises prices for French consumers or risks job losses.

Altice said it “declined to comment on French rumours” and that it was focused on “implementing the debt agreement, considering the sale of non-core assets, and continuing SFR’s commercial revival and improving service quality”.

Away from France, Drahi has previously examined sales of the major units comprising Altice International and could restart these processes. Most notably, Saudi Telecom reportedly offered €8bn for its Portuguese business, although talks collapsed last year without a deal. 

“Everything is for sale,” said an executive at another telecoms company.

Additional reporting by Sujeet Indap and Kieran Smith