(Bloomberg) — Altice International has moved two of its units out of the reach of creditors, and raised new debt from one of them, in an aggressive move aimed at stabilizing its finances.
The telecommunications provider has designated Altice Portugal SA, which holds all of the company’s operations in Portugal, and Altice Caribbean Sarl, housing its activities in the Dominican Republic, as so-called unrestricted subsidiaries, according to a statement on Friday.
As such, the units aren’t governed by the rules of existing financing agreements. Instead, they are free to incur debt, sell assets, or pay dividends without needing approval from lenders.
At the same time, one of the Altice Portugal divisions has raised €750 million ($870 million) of new debt to pay upcoming Altice International liabilities, as well as for general working capital purposes, the statement said.
The company also flagged the possibility of raising €2 billion of additional debt at the level of Altice Portugal, according to the note, which would allow it to further bolster its liquidity position.
Altice International’s move — a so-called drop-down — is one of several aggressive tools borrowers and owners can deploy to raise money when struggling with a growing debt pile.
The company has been looking at various options to deal with its €8.7 billion stack of net liabilities.
“Altice founder Patrick Drahi’s latest game of asset Jenga leaves Altice International creditors in a perilous position and facing a restructuring scenario,” wrote Aidan Cheslin, the head of European credit research at Bloomberg Intelligence. The decision to designate its core Portugal and Caribbean assets as unrestricted leaves “the remaining restricted group (principally Israel) with an annualized net debt-to-Ebitda ratio of 26x.”
Altice International’s 5.75% dollar-denominated bonds due in August 2029 were down over 7 cents to below 67 cents on the dollar following the announcement, according to Trace pricing data.
Creditors have organized ahead of potential debt talks with the company.
Three independent members have been added to the board of Altice International, the statement said, adding that Altice Caribbean is now held by a direct subsidiary of Altice Group Lux Sarl.
The telecommunications firm also announced a strategic review of its portfolio of assets on Friday and will assess some potential disposals over the coming years.
The company posted third quarter results indicating a year-on-year drop in earnings of 12.1%, as well as a 4.2% growth in revenues. Profits were impacted as the streams of revenue currently growing have lower margins, the company said. On top of that, Altice International grappled with higher operating costs.
(Adds analyst comment in eighth graph, bond pricing in ninth, details on earnings in thirteenth.)
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