JPMorgan Chase & Co. is stepping in with a significant financial lifeline for Altice USA. The banking giant is lending the telecommunications company an additional $1.1 billion. This move allows Altice to refinance existing debt before an early repayment penalty takes effect.
Refinancing Before Penalty Period
The funds from JPMorgan will help Altice refinance a $1 billion asset-backed facility. Altice originally obtained this loan from Goldman Sachs Group Inc. and TPG Angelo Gordon in July. The crucial timing comes as the debt's call protection period begins in the coming days. Without this refinancing, Altice would face premium payments above the loan's par value.
Creditor Concerns and Legal Battles
This financial maneuver aims to soothe creditors who have faced considerable uncertainty. Altice USA has been struggling under a heavy debt burden. The company recently brought on advisers to evaluate its strategic options.
Creditors have faced additional challenges from Altice's recent actions. In November, the US unit of billionaire Patrick Drahi's telecom empire filed a lawsuit. The company sued creditors including Apollo Capital Management LP, Ares Management LLC and BlackRock Financial Management Inc. The lawsuit alleges these firms formed an "illegal cartel" through a cooperation agreement.
Previous Financial Moves
This isn't the first major financial transaction between JPMorgan and Altice recently. In the same month as the lawsuit, Altice raised $2 billion from JPMorgan. These funds were for early refinancing of a loan due in 2028.
Moody's Ratings highlighted concerns about that transaction. While the loan carried strict investor safeguards, JPMorgan received collateral that had been removed from existing creditors. This effectively moved JPMorgan higher in the debt repayment line, according to Moody's analysis.
Current Refinancing Details
The current refinancing occurs just before a premium period begins. Without this move, lenders could have captured up to 116 cents on the dollar. The asset-backed facility due in 2031 is secured by specific assets.
These assets include receivables from Altice's Bronx and Brooklyn service areas. Network assets, primarily the Hybrid-Fiber Coaxial network, also serve as collateral. The company recently rebranded as Optimum Communications Inc., though it continues to face financial pressures.
Industry Response
Representatives from JPMorgan, TPG, and Goldman Sachs have declined to comment on the transaction. Altice representatives did not immediately respond to requests for comment. The telecommunications industry continues to watch these developments closely.
Preserving cash remains crucial for Altice's operations. Any efforts to maintain liquidity are likely to appease creditors to the embattled firm. The company's financial maneuvers demonstrate the complex challenges facing telecommunications companies with significant debt loads.
