Altice USA’s debt faltered after management comments on this morning’s Q1’24 earnings call heightened concerns the telco giant could undertake balance sheet maneuvers to the detriment of creditors, sources tell LFI.
Despite addressing its front-end maturities that spanned 2024 to 2026 earlier this year via new $2.05bn 11.75% guaranteed notes issuance and a $750mn draw on its revolver, CFO Marc Sirota hinted on the Q1’24 call this morning that Altice plans to evaluate long-term options for its capital structure, with its leverage currently sitting at around 7x.
Sirota said, “We will continue to be proactive in managing our debt maturities and evaluate how best to ensure that our capital structure supports our long-term operating goals. While we are well positioned in the near term, we are looking at all options to maintain a capital structure that supports our long-term strategic objectives.”
Ahead of earnings and in anticipation of a potential balance sheet exercise, a group of creditors across tranches banded together with Akin Gump as counsel, sources said. Today, the consortium grew to a significant size as creditors consider next steps following management comments today and in light of owner Patrick Drahi taking an aggressive stance against investors during Altice France’s Q4 call in March, according to sources.
One of the options under consideration is to offer deleveraging solutions given the debt trades at a discount, sources noted. Houlihan Lokey is also talking to certain creditors on evaluating options, sources added.
Debt issued via Altice USA’s CSC Holdings entity – which houses the company’s cable assets – was noticeably lower this afternoon, with its $2.05bn 11.75% senior guaranteed notes due 2029 changing hands at either side of 84, down from trades at either side of 88 yesterday. Its other series of $2.25bn 5.75% senior unguaranteed notes due 2030 fell to a 41.5-42.5 market, down from 44-45 yesterday and trades on either side of 50.5 a month ago.
On the loan side, Altice Financing’s TLB fell to an 88.5-89.5 market, from 90-91 yesterday, while CSC Holdings’ $1.98bn TLB-6 due 2028 (S+450) and $2.88bn TLB-5 due 2027 (L+250) were mostly unchanged on the news today.
“We do not see ATUS able to organically improve its credit metrics before the 2027 maturity wall and management dropped hints toward LME as it weighs options for its capital structure that ‘supports long-term objectives,’” CreditSights noted in a report today.
“Looking at recovery values, we think the senior guaranteed notes are in the 90%-100% LTV bucket, with the unsecured notes largely impaired in a straight waterfall,” wrote Head of Telecom/Media Davis Hebert and Analyst Savannah Buzzeo.
“Overall, we would steer clear of the structure in general, for fear ATUS would look to be just as aggressive as in France to capture discount, although the company does have runway through 2027,” the analysts concluded.
The company’s Q1’24 adjusted EBITDA went down 2.5% year over year to $846.6mn while total revenue fell by 1.9% to $2.3bn for the quarter, both weak yet in line with expectations, as reported.
Skylar Chen
Senior Reporter
LevFin Insights
Peter Agra
Senior Reporter
LevFin Insights
