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Covenant Analysis: Exploring Altice France’s Liability Management Options: Debt Push-Down, Priming / Subordination Threats Could Be Used to Coerce Creditors Into a Deal

Altice France

Legal Research: Aditya Khanna, Temitope Adesanya Credit Research: Nikhil Varsani Relevant Item: Reorg Q4’23 Updated Capacity Calculator (Excel Download) The stir created by French telecommunications and media company Altice France SA’s fourth-quarter 2023 earnings call is yet to die down. The trigger was management’s notification that it had revised its deleveraging target, now aiming to delever below 4x, which would require participation of investors in discounted debt repurchase or exchange transactions. Investors are still digesting the implications of this announcement and the related designations of its media business (Altice Media) and its data center company (UltraEdge) as unrestricted subsidiaries under its financing documentation in connection with agreements to sell Altice Media and majority control in UltraEdge to third parties. In our recent analysis, we explored Altice France’s ability under its bond documentation to “drop down” these and other assets to unrestricted subsidiaries. We concluded that it has significant capacity to do so, with the implication that proceeds from any disposition of such unrestricted subsidiaries are not required to be used to repay debt or be reinvested in the restricted group. Altice France is yet to give any further details on the contours of the liability management transaction through which it[...]