Estimated €12 Billion Investment Capacity Enables Massive Altice International Drop-Downs; Risk of Challenge May Rise Due to Ambiguities in Change of Control Clause

Legal Research: Aditya Khanna, Temitope Adesanya Credit Research: Nikhil Varsani Key Takeaways Altice International’s massive drop-downs of its Portuguese and Dominican Republic businesses are enabled by its estimated €12 billion investment capacity under its bond documentation. These businesses contributed about 75% of the group’s revenues and 80% of the group’s adjusted EBITDA in the last twelve months. Whether the drop-downs will trigger the change-of-control put option under the bonds is nuanced and uncertain, which could heighten the risk of challenge. Altice International also has almost unfettered flexibility under its bond documentation to determine how to allocate the proceeds from the previously announced potential sale of Hot Mobile. The cooperation agreement representing around 80% of the company’s senior secured debt may not affect the drop-downs or the Hot Mobile sale itself, but could work to limit the range of secured creditor-on-creditor violence possibilities, such as discounted exchanges. The drop-downs reflect a more aggressive approach by Patrick Drahi compared to Altice France. Several theories could be put forward to make sense of the approach but only time will tell how this will play out. Background It must be busy days in the Patrick Drahi camp. In France, hot on the heels of[...]