Patrick Drahi had it bad on Monday when presenting the results of the second half of the entity Altice International, the empire he leads, built around the media (BFMTV and RMC) and telephony (SFR), between others. And the reason for his anger went far beyond the initial reason for the meeting today. Because it was his first speech since the incarceration in Portugal of his right arm, Armando Pereira, accused of corruption and money laundering. Patrick Drahi claimed to have been “betrayed” by “a small group of individuals including one of our oldest colleagues”, referring directly to his most loyal lieutenant.
The latter was caught by the patrol on July 13 in Portugal before being released on the 24th and then assigned to residence pending his trial. This 71-year-old businessman would have developed a financial package based on several companies – belonging to his relatives – which would have been granted privileges in the award of certain contracts. According to the Portuguese newspaper J.N.these off-shore companies would be “about forty” and would have allowed “the concealment of more than 650 million euros”.
Investors worried
The Portuguese tax authorities also suspect Armando Pereira of having received commissions via these front companies as well as benefits in kind. In the sights of the authorities: an apartment located in Neuilly-sur-Seine, in the very chic western suburbs of Paris, which would have been acquired via one of these companies and then sold to Tatiana Agova-Bregou, executive director of content for the group and close to Armando Pereira. “If the suspicions of the tax authorities turn out to be true, it would mean that a small group of individuals hid their actions and took advantage of some of our acquisitions to the detriment of Altice and my reputation”, thundered Patrick Drahi this Monday evening .
In addition to possible moral damage, it is the financial consequences that worry in the upper echelons of the group. Because to sustain its activities, it is essential that investors continue to buy the bonds issued on the markets. However, the latter do not show confidence at all times. As proof, the Altice USA share – the only entity still listed on the stock exchange – contracted by 7% on Monday evening after Patrick Drahi’s speech. Because the questioning of Armando Pereira comes as the group has to deal with a colossal debt, estimated at around 60 billion euros.
Asset disposals and reduction of investments
And if investors decide to shun the group’s bonds, Altice will have to borrow more to continue operating. And thus dig the said debt which amounts to 23.8 billion euros, only for the French branch. This Tuesday, in an attempt to reassure investors, Patrick Drahi indicated that his “only priority” was to reduce this debt and promises, to achieve this, to sell assets (for example the sale of SFR data centers) and to cut back on future investments. It also remains to be seen what will happen to the media division, which is mobilizing significant funds, while the imperative of debt reduction appears more and more pressing.