(Bloomberg) -- Patrick Drahi is in for a pay day after agreeing to sell his stake in BT Group Plc. That may or may not be good news for creditors of Altice.
If the billionaire owner of the media giant decides to use the money from the sale of Altice UK’s 24.5% stake in BT to pay down debt, it will come just in time for creditors getting ready for a bruising round of debt talks to limit writedowns.
That’s still unclear.
Only last September Drahi said he was willing to potentially put everything in the Altice universe, the telecommunications and media giant he cobbled together over 30 years, up for sale to cut leverage. That pledge is wearing thin with investors nearly a year on. The group has unloaded an assortment of mostly non-strategic assets and made it clear it wasn’t planning to repay debt in full, at least for the French and reportedly US units.
As Altice heads into talks with its creditors, what will happen to the proceeds from the BT sale is an open question. Drahi may well keep the money, if a decision to shift proceeds from a recent deal out of reach of Altice France creditors is any indication.
A representative for Altice declined to comment or provide any detail on the use of proceeds for the BT sale.
Here’s a glance at progress so far on other debt targets and asset sales across the group.
Altice France (€24.2 billion debt)
As they head to the negotiating table, Altice France creditors have already been warned they’ll take a haircut on valuations to slash more than €24 billion ($26.2 billion) of borrowing.
The company has boosted the plus side of its ledger by about €3.5 billion. That includes €2.5 billion from the sale of 70% of SFR’s data centers, the Altice Media business and the 49% stake it has in La Poste Telecom, which Bouygues Telecom is in exclusive talks to buy, and €1 billion from a dividend recap from XpFibre. A sale of XpFibre, though, has been put on hold because offers were deemed too low.
All told, the €3.5 billion meets a target Altice announced last August to cut leverage inorganically by one times its earnings before interest, taxes, depreciation, and amortization, but it’s still a long way from the leverage target of less than 4 times its earnings the French unit laid out in March. Right now it’s around 6.5 times.
Altice International (€9.2 billion debt)
The company has set out a target of cutting debt as a ratio of ebitda to as low as 4 times, from 5 times. Earlier this month, it agreed to sell its video advertising platform Teads SA to US ad company Outbrain Inc. in a $1 billion deal, including $725 million upfront cash. In 2021, the company was looking to list the business for a valuation of about €5 billion, but eventually shelved plans.
While there was no use of proceeds mentioned in the statement, in May management told creditors that the sale of Teads or Altice Portugal, if completed, would be used to cut leverage.
Altice International is still in the process of selling its Portuguese business at the center of the corruption investigation involving Armando Pereira, co-founder of Altice and Drahi’s right-hand before his 2023 arrest.
Meanwhile, the sale of the unit in the Dominican Republic was shelved as the bids were seen as too low and the company doesn’t need to sell anything at a discounted value, management told investors in May. Its Israeli business, Hot, is not for sale.
Altice USA ($24.6 billion debt)
Altice USA hired investment bank Moelis & Co. earlier this year to evaluate options.
In December, it sold news business Cheddar to media company Archetype for an undisclosed amount. Altice USA will collect up to $50 million in the future if Cheddar meets certain performance targets, according to CNBC.
Altice UK
In May last year, Drahi increased its stake in BT to 24.5% from 18%, giving him double the holding of the next-biggest investor. On Monday, Bharti Global announced it had agreed to buy that stake for an undisclosed amount.
Altice UK acquired about 2.44 billion shares of the British company between June 2021 and May 2023. As of Friday’s close, the holding was worth £3.18 billion ($4.1 billion), a decline in value of about £990.9 million since Drahi bought it, according to calculations by Bloomberg News. Altice took out a more than £1 billion margin loan against its stake in BT, the Financial Times reported last month.
Sotheby’s
Through his holding BidFair, Drahi took the auction house private in 2019 for $3.7 billion, adding prestige to his stable of assets. After ditching a potential IPO plan last year, New York-based Sotheby’s has announced last week a $1 billion investment coming mostly from Abu Dhabi sovereign wealth fund ADQ, with Drahi also contributing an unknown amount.
Below is a table summarizing the state of play of the asset sale process:
--With assistance from Lucca de Paoli.
©2024 Bloomberg L.P.
