(Bloomberg) -- A letter sent by the law firm advising Altice France’s secured creditors is putting the group’s unity to the test, raising the prospect of its members splitting to negotiate with the company on their own.
Gibson Dunn & Crutcher, a law firm advising the group, sent a letter on Wednesday calling for an extension to a cooperation agreement that bars individual funds from doing side deals with the company, according to people familiar with the matter, who asked not to be identified discussing private information. Some funds are now weighing whether they’d be better off negotiating on their own with the troubled French telecoms firm, the people added.
The creditor group, which holds about €17 billion of the secured debt, formed in the wake of billionaire owner Patrick Drahi’s request that creditors take losses on their holdings to help Altice France slash its €24.4 billion debt pile. Until now, the group has presented a united front. Its cooperation agreement is a common negotiating tactic employed by creditors in US out-of-court restructurings.
The current deal expires in February, but Gibson Dunn’s letter asked members to sign an extension until February 2026, with the option of a further extension until August that year, the people said. Members of the group have until Sept. 26 to sign the extension, they added.
Some funds in the group, including some that are part of the steering committee leading the talks with the company, are considering refusing the extension due to the risk of an extended deadlock, some of the people familiar said.
Spokespeople for Altice and for the secured group of creditors declined to comment. Representatives for Gibson Dunn and Rothschild didn’t immediately reply to a request for comment.
Debt Discussions
Altice first floated the idea of losses for creditors in an earnings call in March, but only approached creditors formally in July. Secured creditors rejected the company’s proposal to cut the face value of their holdings by 20%. Earlier this week, they sent their own plan to make the financial burden bearable for the company and palatable for the different creditors in the group, Bloomberg reported.
Designing a common proposal was no easy task, given the differing interest of the group’s members. Some creditors are original debtholders and are more reluctant to accept haircuts to the face value, while others bought at a discount and could potentially still make money even with a discount.
Another sticking point had to do with how to share the pain across the company’s maturity curve. While all creditors have the same legal claims, those with holdings concentrated in the debt that matures early next year want to get repaid in full (or close to), and have an incentive to drag out the discussions until February so that the company has to repay if no agreement has been found before then.
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