Optimum Communications Raises $300M of New Money at Unrestricted Subsidiary to Fund Common Equity Tender, Moves Ownership of Lightpath to UnSub

Relevant Documents:
8-K
Cleansing Materials
 

 

• Optimum Communications raised $300 million in new money by selling Series A preferred equity at an unrestricted subsidiary, CSC Investments II LLC, or “Unsub Topco,” which indirectly holds the company’s East region and Lightpath assets, with the proceeds to be used to fund a tender offer for an equivalent amount of its common stock. It also announced that it exchanged $200 million of existing common stock held by founder Patrick Drahi for Series A preferred equity. The Series A preferred equity would pay a 13% dividend if paid in cash.
   
• These transactions serve to move more value away from Optimum’s restricted group, where the vast majority of its funded debt is issued, by placing its 50.01% ownership of Lightpath into this unrestricted subsidiary as well.
   
• For the first time, Optimum disclosed granular details of its historical and future expected revenue, capital expenditures and subscriber metrics for its East and West regions showing that the East region currently has 65% of all subscribers; this is expected to increase to 68% by 2031.
   

Optimum Communications, fka Altice USA, this morning disclosed a number of balance sheet initiatives and transactions meant to move further value away from the CSC Holdings restricted group, which issued the vast majority of the company’s debt. The company transferred the entity that holds its 50.01% ownership of Lightpath to a new unrestricted subsidiary. This follows a November 2025 unsub transaction when Optimum moved substantially all of its East region assets out of the restricted group and raised new debt against those assets.

The company disclosed that it issued an aggregate of approximately $512.4 million of “Unsub Topco” Series A preferred equity, $300 million of which was sold in a private placement to institutional investors in exchange for new money. The remaining $212.4 million was issued in a private exchange offer for Optimum common equity, with $200 million of the new preferred being issued to entities controlled by Patrick Drahi, Optimum’s founder and member of the board of directors, and $12.4 million to other Optimum management and board members. The company further disclosed that CSC Investments II LLC, or “Unsub Topco,” is the parent company of the unrestricted subsidiary that holds the company’s East region assets.

Optimum provided a simplified organizational chart, as reproduced below.
 

The new preferred equity would pay dividends at a rate of 13% if paid in cash and 15% if paid-in-kind, at the election of the company. The equity would also feature a multiple on invested capital, or MOIC, based on redemption price. The equity is redeemable at any time, but if redeemed within the first nine months after issuance, it must be redeemed at a price to provide a MOIC of 1.25x. The MOIC rises to 1.5x after the earlier of nine months after issuance, completion of a potential public exchange offer or “the occurrence of specified enforcement actions by creditors of CSC Holdings.” The MOIC would rise to 2.5x if CSC Holdings commences a “Non-Consensual CSC Restructuring,” if any CSC debt is accelerated, or following “the enforcement of creditor remedies under any CSC Debt Document by the relevant creditors.”

The $300 million of new money would fund a tender offer for up to 120 million shares of Optimum’s Class A common stock at a price of $2.50 per share, a substantial premium to the previous closing price of 66 cents on May 29. The press release announcing the tender offer notes that Drahi and Optimum’s directors and executive officers have notified the company that “they will not participate in the tender offer.” Optimum’s common stock soared on the news, closing at $1.16 per share today, up about 75% from its previous close, according to Yahoo Finance.

The company notes that it “may conduct a registered public exchange offer” and offer holders the option to exchange Class A common shares for preferred equity on substantially similar economic terms as the private exchanges “up to an amount equal to $300 million less the aggregate purchase price for shares purchased in the Tender Offer.”

The terms of the preferred equity also set limits on Unsub TopCo’s consolidated permitted debt balances, “subject to compliance with a consolidated total net debt ratio (excluding the Preferred Units or any senior equity) of 4.50x on a pro forma basis, and to incur senior or pari preferred equity subject to a consolidated total net debt and preferred equity ratio of 4.75x on a pro forma basis.”

Optimum also disclosed financial details for its East and West regions, including revenue, number of subscribers and other metrics that the company has historically not disclosed at the regional level. Octus has reproduced the East and West region metrics below, noting that totals and percentages may differ immaterially from the cleansing materials because of rounding.

In 2026, the company estimates, 65% of its broadband subscribers are in its East region, while 35% are in the West region. By 2031, the company said, it expects that split to be 68% in the East and 32% in the West.