(Bloomberg) -- Secured creditors of Altice France including BlackRock Inc., Elliott Investment Management and Pacific Investment Management Co. are readying a counterproposal to the company’s plan to reduce its €24.4 billion ($26.9 billion) debt pile, according to people familiar with the matter.
The embattled French telecommunications firm, which is part of billionaire Patrick Drahi’s business empire, presented a plan in July to the steering committee of a group of secured creditors asking them to take a 20% haircut in their holdings to help the company slash leverage to below four times its earnings before interest, taxes, depreciation and amortization.
The effort to craft a counterproposal is complicated by the fact that there are differing views among the secured creditors over how the burden of any potential losses should be shared among debtholders that are equally senior, the people familiar with the matter said, asking not to be identified discussing private information.
Altice, which includes France’s second-largest carrier SFR, grew with debt-fueled acquisitions in the low interest rate environment. It has €20.2 billion of secured debt, including bonds and loans denominated both in dollars and euros, as well as €4.2 billion of unsecured debt, an unsustainable amount with higher rates and the core part of the business performing weakly.
The group advised by Rothschild & Co. and Gibson Dunn & Crutcher holds about €17 billion of the secured debt. The steering committee also includes Anchorage Capital Group LLC, UBS Asset Management — formerly Credit Suisse Asset Management — and Sona Asset Management, among others.
Investors holding debt coming due soon — in particular those with bonds due in January and February next year — argue they should be repaid at par or close to par, while creditors mostly holding securities maturing between 2027 and 2029 don’t see why they should get worse treatment than the others given that all the debt is on an equal footing legally, the people said.
If the company can’t reach a deal before the notes mature in January and February, it would have to repay those two series to avoid a messier situation. Altice is counting on €2.5 billion from asset sales —including its stake in La Poste Telecom that Bouygues Telecom received regulatory approval to buy — and about €1 billion from a dividend recap from XpFibre to potentially use in the discussions with creditors, Bloomberg reported earlier.
In the group there are both original lenders that are pushing to get recoveries closer to par, and investors that bought at a discount and could be more open to taking a haircut because they would still make money, the people familiar added.
A vast majority of the members of the group advised by Gibson Dunn and Rothschild signed a cooperation agreement that legally binds their members to not do side deals with the company to the detriment of the other members. The agreement was extended to February and there are discussions around whether to renew it until February 2026, the people said.
Spokespeople for Altice, Anchorage, BlackRock, Elliott, Pimco, Sona and UBS declined to comment.
--With assistance from Reshmi Basu.
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