In a bold financial maneuver, Altice International has strategically repositioned two of its key operational units beyond the immediate control of its creditors. The telecommunications giant announced this significant restructuring move on Friday, aiming to stabilize its financial position amid mounting debt pressures.
Strategic Asset Reclassification
The company has officially designated Altice Portugal SA, which encompasses all of its Portuguese operations, and Altice Caribbean Sarl, housing its Dominican Republic activities, as unrestricted subsidiaries. This crucial reclassification liberates these entities from the constraints of existing financing agreements that previously governed them.
Under this new structure, both units now possess enhanced operational flexibility. They can independently incur new debt, execute asset sales, or distribute dividends without requiring prior approval from lenders. This strategic shift provides Altice International with greater financial maneuverability as it navigates its substantial debt obligations.
Immediate Financial Actions
Concurrent with this restructuring, the company has already capitalized on its newfound flexibility. A division within Altice Portugal has successfully raised €750 million (approximately $870 million) in new debt. According to the official statement, these funds will address upcoming Altice International liabilities while also serving general working capital requirements.
The company has also indicated potential for additional borrowing, flagging the possibility of raising up to €2 billion more at the Altice Portugal level. Such a move would substantially strengthen the company's liquidity position, providing crucial financial breathing room.
Market Reaction and Financial Context
The market response to these developments has been notably negative. Following the announcement, Altice International's 5.75% dollar-denominated bonds due in August 2029 experienced significant pressure, dropping over 7 cents to trade below 67 cents on the dollar according to Trace pricing data.
Aidan Cheslin, Head of European Credit Research at Bloomberg Intelligence, characterized the move as "Altice founder Patrick Drahi's latest game of asset Jenga" that places Altice International creditors in "a perilous position and facing a restructuring scenario." Cheslin further noted that the restructuring leaves "the remaining restricted group (principally Israel) with an annualized net debt-to-Ebitda ratio of 26x."
The company's financial challenges are underscored by its recent quarterly performance. Third-quarter results revealed a 12.1% year-on-year decline in earnings, despite achieving 4.2% revenue growth. The company attributed the profit squeeze to lower margins from its growing revenue streams and increased operating costs.
Broader Strategic Implications
This restructuring represents what financial professionals term a "drop-down" strategy - an aggressive financial tool that borrowers and asset owners can deploy when confronting substantial debt burdens. Altice International has been actively exploring various options to manage its €8.7 billion stack of net liabilities.
In preparation for potential debt negotiations, creditors have already organized, and the company has added three independent members to the Altice International board. The statement also clarified that Altice Caribbean is now held by a direct subsidiary of Altice Group Lux Sarl.
Looking forward, the telecommunications provider announced a comprehensive strategic review of its asset portfolio. This evaluation will assess potential disposals over the coming years as the company seeks to optimize its operational footprint and financial structure in a challenging market environment.
