(Bloomberg) -- A large group of Altice France secured creditors sent the company a proposal to fix its €24.4 billion ($27.2 billion) debt pile that raises the possibility of billionaire owner Patrick Drahi losing control, according to people familiar with the matter.
The creditors delivered their plan on Tuesday and the company is reviewing it, although it’s unlikely to accept it, said some of the people, asking not to be identified discussing private information.
An Altice spokesman declined to comment, as did a representative for the secured group.
The embattled French telecommunications company asked secured creditors in July to take a 20% reduction in the principal value of their holdings to help the company slash leverage to below four times its earnings before interest, taxes, depreciation and amortization.
Under the counterproposal this week from the secured creditors’ steering committee, collateralized loan obligations that are invested in Altice would get so-called takeback debt, which involves a repricing and an extension of their holdings, some of the people said. The rest of the secured debtholders would see a 15% haircut, or reduction of the principal, some of them said.
In exchange, debtholders would receive convertible bonds exchangeable for a significant equity stake, the people said. That could lead to creditors taking control of the company from Drahi depending on the value at the time of the conversion, they added
Creditors acknowledge that Altice can’t bear the burden of its debt load given the company’s earnings trajectory and the amount of capital spending that’s needed for the business, some of the people said. They’re proposing an amount of interest the company can deal with that’s also palatable for creditors, they said.
The creditors also asked the company to use a chunk of the €3 billion it has available from asset sales and a dividend recapitalization to repay secured debt, as well as for Drahi to contribute additional equity, they said.
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.
The debt load has become unsustainable given the rise in rates and the weak performance of the French telecom business.
The group is still holding discussions with an unsecured group of creditors over how to reduce that debt, some of the people said.
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