November Covenants Monthly: Altice, Lowell Add Pages to LME Playbook in Europe; What the Waldorf Appeal Could Mean for European LMEs; Kelvion’s 2032s Provoke Rare Investor Pushback

• Creditors find room for innovation in liability management excercises: Creditors continued to find creative avenues in LMEs, from Altice USA’s anti-cooperation maneuver to Lowell’s bond-to-securitization transaction.
   
• Waldorf Supreme Court appeal could prove pivotal for Part 26A: In what will be the first appeal on the Part 26A restructuring plan before the U.K. Supreme Court, market participants are hoping it will provide clarity and predictability amid a rising LME backdrop

• Transcom secures consent in coercive exchange offer: The offer incentivized early exchange while threatening a covenant-strip of existing notes to persuade holders of 2026s to roll into 2030s.

• Kelvion’s 2032s for leveraged buyout financing draws rare investor pushback: Amid a strong high- yield market in November, Kelvion stood out with a particularly aggressive covenant package – one that investors pushed back on.

 

 

 

 

November saw a number of key developments in LMEs, signalling shifting dynamics in the market toward more creative tools for managing debt. This included Altice coming back to the fore with a series of aggressive LMEs in the United States and Europe, a bond-to-securitization LME from Lowell and Waldorf Energy’s challenge of the Part 26A in the U.K. Supreme Court, which could have significant repercussions on how distressed creditors tackle debt in the future: either through LMEs or the courts.
 

As many in the United States were gearing up for the Thanksgiving holiday, Altice was readying the turkey baster to use on its creditors in another LME. On Nov. 25, Optimum Communications (formerly Altice USA) transferred a substantial portion of its assets to support a new loan aimed at repaying the most restrictive debt in its capital structure. At the same time, the company filed an antitrust lawsuit against several of its largest creditors, alleging that their cooperation agreement is illegal and unenforceable under U.S. federal and New York state antitrust laws. The suit seeks an injunction preventing the defendants from enforcing the agreement, as well as treble damages. The lawsuit follows the inclusion in the new Optimum drop-down loan of an anti-cooperation provision, which marks the first time that anti-cooperation language has cleared the broadly syndicated loan, or BSL, market. That said, given the highly bespoke nature of the provision, its broader market impact remains uncertain. So far, anti co-op provisions have only cleared the market in very tailored situations, making it unclear how widely applicable this one will be.

Days later, Altice International announced a seismic drop-down of Altice Portugal and Altice Caribbean, which we estimate to be worth about 75% of the group’s revenue and 80% of the group’s adjusted EBITDA over the last 12 months. Altice International had scope for the move due to its estimated €12 billion investment capacity under its bond documentation. Further moves to deleverage the business may be upcoming, as the group announced intentions to sell its Israeli mobile business, Hot Mobile, for which Altice has nearly unrestricted ability to determine how to apply the proceeds.
 

While Altice has grabbed headlines with its aggressive playbook for LMEs, innovation has been achieved elsewhere. Credit management services provider Lowell took the market by surprise with what looks to be Europe’s first bond-to-securitization liability management transaction. Lowell took to the market with €200 million asset-backed financing, backstopped by Arini, conditioned on a broader restructuring for March 2026.

While Lowell has indicated that the backstop providers hold sufficient majorities required to implement this, it is unlikely that Arini holds the requisite majorities to effect such a transaction via an amendment of the company’s debt or a scheme. In which event, a Selecta-style distressed disposal could be the best fallback option. Given that enforcement control shifts over time among the second lien, 1.5 lien and RCF lenders, Arini’s voting control or ability to refinance these tranches will be central to shaping the ultimate endgame.

Meanwhile, a new challenge to the Part 26A restructuring plan in the U.K. could have profound impacts on whether distressed creditors turn to courts to restructure debt or more cost-efficient, albeit acrimonious, methods like an LME.

At the center of the case is British oil and gas company Waldorf Production, which successfully received a leapfrog appeal to the U.K. Supreme Court (bypassing the Court of Appeal) seeking to overturn the High Court’s refusal to sanction its plan. The case marks the first time that a Part 26A restructuring plan appeal will be heard by the Supreme Court and some market participants are hoping that the case will bring increased clarity to the law. We evaluated how recent Court of Appeal decisions in Adler, Thames Water and Petrofac have muddied the water for those looking for predictability in the English Court, leading some to seek alternative methods, such as more aggressive LMEs, to manage debt.
 

We also published an LME Risk in Brief examining the options for German fiber operator Tele Columbus, which entered discussions with its largest indirect shareholder, Morgan Stanley Infrastructure Partners, to explore potential financing solutions. The company is seeking ways to preserve the liquidity levels required under its loan agreements while avoiding the need to raise additional debt.

Current shareholders have so far ruled out further equity injections, raising the possibility that a new investor could step in, though another option would be for the company to approach its bondholders. As previously reported, Arini has recently accumulated more than €100 million in Tele Columbus bonds, though sources stress that no creditor engagement has taken place to date.

To see a copy of our LME Risk In Brief relating to the Tele Columbus’ facility agreement dated March 19, 2024, email [email protected], together with a copy of the facility agreement.

To see our legal analyses on Tele Columbus AG’s €503.2 million term facilities maturing Jan. 1, 2029, (Term Loans) email us HERE with a copy of the March 19, 2024, amended and restated SFA. Find our legal analysis of the €636 million 10% senior secured PIK notes due 2029 HERE.
 

 

Sweden-based customer relationship management services company Transcom and Spanish pharmaceuticals company Grifols both launched consent solicitations to amend terms of existing notes. Transcom notably took a more heavy handed approach with noteholders in its consent solicitation to exchange its €380 million senior secured floating-rate notes due 2026 for new notes maturing in 2030. For holders not enticed by the exchange, the company is also seeking amendments to the 2026 notes that would strip covenants, remove credit support and/or extend the maturities beyond those of the new 2030s, depending on the levels of consent obtained.

Meanwhile, Grifols successfully garnered enough support on its consent solicitation for holders of its 7.5% senior secured notes due 2030 to approve amendments which will align it more closely with terms set out in the more recently issued 7.125% senior secured notes due 2030. As we highlight in our analysis, though the amendments appear intended to facilitate the refinancing of its existing first lien credit facilities maturing in 2027 with first lien debt, the broad-brush approach of the amendments does leave open the possibility for any such refinancing debt being secured on a priming basis on non-collateral assets.
 

The high-yield bond market kept pace in November despite the Thanksgiving holiday, with nine deals reviewed by EMEA Covenants in the month, compared with 10 in October. Refinancings continued to dominate the market, representing 78% of deals. Acquisition funding for Breakwater Energy and Kelvion accounted for 22% of deals reviewed in November. The average bond score* in the month settled at 3.38, with Kelvion’s leveraged buyout ranking as the most aggressive offering of the month at 4.03 while Wepa Hygieneprodukte’s 2032s had the most lender protective score of the month at 2.49.

Continuing October’s trend, November deals offered less day-one capacity for general-purpose debt than the four-quarter market average. Conservative offerings from Wepa Hygieneprodukte, Picard and Ardagh Metal Packaging, which recently completed a restructuring, drove averages down in the month. Still, there were some issuers that tested investors with materially bolder day-one packages in November, such as Kelvion and KIKO Milano.
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The German heat exchanger manufacturer raised €750 million in senior secured floating-rate notes due 2032 to finance the acquisition of a majority stake in the Kelvion group by Apollo. As we highlighted above, Kelvion stood out in November with the highest bond score and day-one covenant capacities, well above the last four quarter market averages.

This flexibility was particularly high for priming debt, with structurally senior debt capacity at more than 4x the market average. This excessive capacity is driven largely by the absence of a non-guarantor debt cap and a blanket permission to secure all permitted debt on non-collateral. However, the notes contain a myriad of other weaknesses, including a second “Available Amount” builder basket, dividend-to-debt toggle, super-grower, and ‘ratio not worse’ test for making investments just to name a few.

Investors managed to carve back some added protection in a successful wave of pushback which saw cost savings and synergies capped, a limitation of super-growers to acquisitions and investments, as well as the addition of Chewy protection and partial J Crew protection. While the covenant package remains quite aggressive, falling from a score of 4.33 to 4.03, the presence of pushback is cause for cheer this holiday season. As we’ve highlighted previously, 2025 has so far been a relative dry spell for investor pushback, with only 9% of deals in Q1 – Q3 2025 drawing successful pushback compared to 19% in 2024. Given the unfolding LME landscape in Europe and high level of pushback seen in the loans market, despite typically tighter terms, we consider this a step in the right direction in the high-yield market.
 

A summary table of European high-yield bonds in November is below:
 

To see our analyses of these documents, visit the Bonds Library HERE.
 

The loans market continued to slow in November, with nine deals reviewed by EMEA Covenants compared to 21 in October. The market was largely driven by repricings, accounting for 45.5% of deals reviewed. Amend-and-extend transactions also saw a boost, rising to 27% of deals, while full refinancings and M&A funding each decreased from the prior month, to 18% and 9% of deals, respectively.
 

November deals were more aggressive than in October, with an average score of 3.62 compared to 3.46 previously. Serbia’s LBO by Warburg Pincus Consortium had the most aggressive score of the month at 4.0. Telecommunications provider Eircom had the most lender protective score at 3.23.
 

A summary table of loans reviewed by EMEA Covenants in November is below:
 

To see our analyses of these documents or to talk to one of our legal analysts, click HERE. You can get access to the analysis if you have a copy of the applicable credit agreement or subscribe to FinDox.
 

 

Amid ongoing underperformance and tightening liquidity, lenders to French pharmaceutical solutions and specialty chemicals producer Seqens have formed an ad hoc group. In this webinar on Nov 5., Octus’ Chetna Mistry, Robert Schach, and Jason Iheuko discussed the developing situation and analyzed the company’s options ahead of the expected balance sheet restructuring.

The webinar replay is available HERE.