After Casino and Atos, a new financial soap opera is emerging. And, given the sums at stake four to five times greater, the story promises to be even more gripping. Altice France, the group of Patrick Drahi, owner of the telecoms operator SFR, launched last week a debt restructuring operation which peaked, at the end of 2023, at 24.3 billion euros.
For Altice, this level is untenable while SFR has been losing several hundred thousand customers every quarter for the past year and a half. Wednesday March 20, during the presentation of the 2023 results, a telephone meeting in which Patrick Drahi did not participate, the group’s management explained, schematically, that the debt would have to be reduced to a level of around 16 billion euros to ensure a sustainable future for the operator, or 8 billion less than currently.
But to achieve this, it has warned lenders that they will have to abandon part of their debts, i.e. a loss of around 30%. An investor who would have lent 100 to Altice France would therefore only find himself with 70. Altice says it is ready to contribute to this debt reduction plan, using the two billion euros recovered from the sale of data centers and BFM -TV. But on condition that the lenders agree to make the requested effort.
Determined hedge funds
Altice France’s creditors, mainly funds specializing in risky debt (hedge funds), did not expect such an announcement, in this way, and consider it particularly hostile – some do not hesitate to talk about ” blackmail “. Since the alleged corruption case targeting his former associate, Armando Pereira, Patrick Drahi had promised that he was ready to sell some of his companies, including SFR, to repay his debt. After last week’s statements, creditors fear that the businessman will use the proceeds from the sale of data centers and BFM-TV, set aside, to pay a dividend to his personal holding companies.
Hedge funds are determined not to let this happen. In order to bring together a common front, several of them hired the investment bank Houlihan Lokey, as well as the law firms Milbank and Willkie Farr, specialists in debt restructuring. A sign of their mobilization: more than five hundred creditors connected during the two telephone meetings organized on Friday March 22 and Saturday March 23 to understand the legal mechanisms of a file which promises to be particularly complex, between Dutch and Luxembourg holding companies, an Altice company registered in France and the vast majority of debt under American law.
You have 34.02% of this article left to read. The rest is reserved for subscribers.