Altice International Bonds Drop Following Aggressive Drop-Down Announcement; Creditors Evaluate Next Steps Including Potential Litigation

Telecoms group Altice International’s senior secured bonds dropped between six and eight points across 2028 and 2029 maturities, falling to the mid-60s, while the 2027 notes are at about 77 after billionaire Patrick Drahi’s company announced late last week that it had moved two of its subsidiaries out of the restricted group and raised new debt against them. The company’s €675 million subordinated bonds also fell more than 14 points from the day before the announcement, and are currently indicated at 16-21, sources said.

The announcement, published end of day on Nov. 28, revealed that the group had designated Altice Caribbean, which holds substantially all of its operations in the Dominican Republic, as an unrestricted subsidiary and moved its ownership to “a direct subsidiary of Altice Group Lux Sarl.” The move means that the subsidiary will “no longer be consolidated within the Group,” according to the company’s third-quarter report, released on Dec. 1.

The company also moved Altice Portugal, an entity holding its operations in Portugal, outside of the restricted group, and raised €750 million “from a related party” against the entity, to be used for “general corporate purposes” including capex and servicing the group’s upcoming debt payments. Additionally, it reserved €2 billion of debt capacity for the Portuguese subsidiary to “further enhance liquidity and support the strategic review and any subsequent disposal processes”. At the moment, it is unclear who provided the €750 million funding.

The group’s corporate structure prior to the drop-downs is below:

The move is similar to what happened in March 2024 to Altice France, but on a far more aggressive scale. Back then, on the fourth-quarter 2023 earnings call, management shocked the market by announcing that “creditors participation in discounted transactions” was “required to achieve its new net leverage target of well below 4x.” At that time, management designated data center company UltraEdge and Altice Media as unrestricted subsidiaries.

As seen in Altice France, many anticipated controlling shareholder Patrick Drahi would use the group’s loose covenants as a bargaining chip to negotiate haircuts in order to deleverage, while keeping control of the business. Nonetheless, several sources were startled by the timing and size of the drop-down, which took the majority of creditors by surprise.

To put it into perspective in the LTM period to Sept. 30, Portugal and the Dominican Republic together produced about 75% of the group’s revenues and 80% of the group’s adjusted EBITDA.

In the LTM to Sept. 30, 2025, total revenue generated from Israeli assets represented 25% of group revenue while about 20% of the group’s adjusted EBITDA came from Israel – however, we note that what remains behind in the restricted group after the HOT Mobile sale likely constitutes a lower proportion. The company does not report figures for HOT Mobile separately.

Drawing comparison with the recent case of Altice France, many sources see the controversial move as an aggressive starting point for Altice International’s upcoming talks with creditors, by resetting market expectations and placing the company in a stronger bargaining position.

On the other hand, some are less comforted by the similarity to the French counterpart, noting that France’s regulatory framework made it more difficult for Drahi to follow through with aggressive actions due to directors’ duties and clawback risks. Altice International’s Luxembourg incorporation, instead, removes the guardrails provided by the French system and could allow for more creditor-unfriendly actions, some sources suggested.

For how liability management excercise, or LME, transactions may run in Luxembourg, see Octus’ legal analysis HERE.

According to sources, both senior and subordinate creditors are considering next steps, including a possible litigation against the company. The potential litigation might take several routes, including the option of seeking a change-of-control trigger as a result of the above-mentioned drop-downs although uncertainties remain.

Sources agree that Drahi will need to sell some of Altice International’s assets. While valuations vary widely, they expect Altice Portugal to be valued around 7x, Dominican Republic around 4.5x and Israel’s mobile business at 6.5/7x.

Altice International’s main secured creditors include Sona Asset Management, PGIM, Invesco, BlackRock, King Street Capital Management and Arini Capital Management. They are advised by Houlihan Lokey and Gibson Dunn and are part of a cooperation agreement including 85% of the senior creditors, sources said.

Meanwhile, holders of Altice International’s €675 million subordinated bonds due 2028 have lined up Jefferies and Milbank as financial and legal advisors, respectively. U.S. hedge fund GoldenTree Asset Management is the largest holder of the €675 million subordinated notes, as previously reported.

Last week, Optimum Communications, formerly known as Altice USA, filed an antitrust suit in New York federal court accusing creditors of collusion by entering into a July 2024 cooperation agreement, which it defined as “a classic illegal cartel” under which “competing debt investors have agreed to lock Optimum out of the credit market unless Optimum offers terms the entire Cooperative deems acceptable.”

Following the drop-down announcement, Altice International announced an 8.7% drop in third- quarter EBITDA to €78 million, from €85 million in the third quarter of 2024, on a pro forma basis excluding Portugal and Dominican Republic. The drop came despite an 8.2% rise in revenues compared to last year, climbing from €246 million to €266 million, on a pro forma basis.

Octus calculates a 5.7x net leverage multiple based on more than €8.6 billion in net debt, about €3 billion of which matures in 2027. Based on results as of Sept. 30, 2025, and pro forma the latest debt raise of €750 million, the group has about €1.2 billion in liquidity.

In Octus’ analysis earlier this year, we highlighted how assets could be positioned, including those in Israel, to help the group deleverage if it were to go down the Altice France playbook.