Latest news with #Drahi
Mint
23-05-2025
- Business
- Mint
Billionaire Drahi Knows the Art of the Deal
(Bloomberg Opinion) -- Patrick Drahi is on a roll. The billionaire telecoms entrepreneur struck a deal to cut borrowings at Altice France SA in February, lifting the cornerstone of his business empire out of negative equity. Now he's considering cashing in the company's main asset — France's SFR mobile-phone network. A quickfire disposal would be bittersweet for the bondholders who just agreed to rescue Drahi from the mire. Drahi warned in March last year that Altice France's €24 billion ($27 billion) of net debt was unsustainable and creditors would have to take losses. Back then, net leverage was more than six times profit as measured by earnings before interest tax, depreciation and amortization. The equity value was zero or less. A restructuring is set to cut net borrowings to just over €15 billion when it completes later this year, with subordinated creditors taking the biggest haircuts. The primary compensation? A 31% stake in the business for the senior creditors, 14% for the juniors. Drahi retained control with the rest. But the value of that equity could be about to become deliciously clear. With the ship stabilized, Drahi can consider a full or partial sale of SFR from a position of strength. It's certainly an opportune moment to do so. European regulators may be becoming more tolerant of mobile markets consolidating around three players. The UK is allowing Vodafone Group Plc to swallow up UK rival Three, for example. An all-French deal here would likely require SFR to be carved up in varying chunks to Bouygues SA, Iliad SA and Orange SA, as Bloomberg Intelligence suggests. Emirates Telecommunications Group Co. may also evaluate a transaction, Bloomberg News reported. Price might be a bigger stumbling block than regulators. A deal could value SFR at as much as €30 billion, Bloomberg News reported. Even if that included Altice France's stake in the XpFibre network, possibly worth around €2 billion, it would still represent a chunky eight times the €3.5 billion Ebitda that CreditSights research reckons the business could be making come 2027 — not outlandish but high. CreditSights' base-case valuation multiple is five, rising to seven with a takeover premium and potentially higher in a deal with domestic synergies. A transaction at the lower end of the range seems more achievable. That would also be a good comeback: A €22 billion deal would ink €7 billion of equity value, with nearly €4 billion accruing to Drahi. A quick flip of SFR at a strong price would, of course, benefit creditors, given their stake. But it also raises an embarrassing question. Shouldn't they have resisted a restructuring deal and sought to take control of Altice France and flipped it themselves? In that scenario, they would have done even better. The snag is that there was no quick route to seizing control before 2027 when troublesome debt maturities loomed. A more combative group of bondholders might have dragged things out until that crunch point. But the creditors here are an unruly coalition of risk-averse loan funds and opportunistic hedge funds. Drahi took advantage of fears that SFR's performance could deteriorate over time, bringing everyone to the table before it was strictly necessary. If Drahi comes out on top, it looks like the junior creditors have done relatively well at the expense of their senior brethren, although cross-holdings blur the distinction. The junior debt didn't obviously have any value going into the restructuring. Its holders got their lucrative equity stake effectively to buy their consent for a deal. Had they been wiped out, they could have frustrated things with legal action. The cost of cooperation will be felt when the spoils of any SFR deal are shared. Drahi proved adept at reading the dynamics of power between him and his creditors in getting the restructuring approved. Has he read regulators' and telecom bosses' appetite for consolidation equally well? Probably, yes. More From Bloomberg Opinion: This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Chris Hughes is a Bloomberg Opinion columnist covering deals. Previously, he worked for Reuters Breakingviews, the Financial Times and the Independent newspaper. More stories like this are available on
Yahoo
28-02-2025
- Business
- Yahoo
Altice France, Creditors in Deal That Keeps Drahi in Control
(Bloomberg) -- Altice France SA and a majority of its creditors reached an agreement to slash the company's debt by €8.6 billion ($9 billion), letting founder Patrick Drahi keep control of the cable and mobile-phone operator he built through years of acquisitions. The Trump Administration Takes Aim at Transportation Research Shelters Await Billions in Federal Money for Homelessness Providers NYC's Congestion Pricing Pulls In $48.6 Million in First Month New York's Congestion Pricing Plan Faces Another Legal Showdown NYC to Shut Migrant Center in Former Hotel as Crisis Eases The deal resolves one pressing issue between Drahi and the lenders who financed deals such as his 2014 purchase of French wireless company SFR. Altice France racked up a €24 billion debt load at a time of ultra-low interest rates, only to see bond holders turn queasy as borrowing costs rose and the business underperformed. The 61-year-old Franco-Israeli billionaire still has to find agreement with creditors on other fronts: His Altice USA business has been holding confidential discussions over how to address its debt pile. Meanwhile, talks are expected to kick off soon on Altice International, which operates in Portugal, Israel and the Dominican Republic. 'It is impressive to see that Drahi managed to retain control of the entity here,' said Vincent Benguigui, a high-yield portfolio manager at Federated Hermes. 'The situation makes credit more palatable. It will probably attract many high-yield investors back.' Secured creditors including BlackRock Inc., Elliott Investment Management and Pacific Investment Management Co. will get a minority equity stake in Altice France while Drahi will own 55%, according to a statement confirming a Bloomberg News report from Tuesday. Unsecured creditors also will get equity. Altice France's bonds rose following the announcement. The 5.875% secured bonds due in 2027 gained more than 5 cents to 90, while the unsecured notes due in February 2028 gained more than 2 cents to 30, according to Bloomberg pricing. The deal caps a tumultuous year. Altice France told creditors in March last year they would need to accept a lower value for their bonds to reduce the company's leverage to below four times its earnings, and that it had shifted assets outside of their reach, which could potentially be used as part of a negotiation. The bonds sold off as creditors became concerned about potential maneuvers by Drahi that could hinder their position. However, eventually the parties aligned on a consensual deal, for what remains one of the largest junk-rated corporate debt piles in Europe. The agereement puts governance checks in place and tighter rules regulating the debt contracts. Meanwhile, on top of the extra protection, creditors get some equity and cash to compensate them for writing off a part of the debt. A committee of Altice France's secured creditors agreed to work as a group rather than negotiate a side deal with Drahi. It was one of the first of this kind of pacts in Europe - and so far the largest. Under the agreement, they will receive a cash repayment of about €1.5 billion plus accrued interest and an aggregate equity stake of 31%, according to the statement. About 77% of the firm's existing debt load will remain in some form, albeit with longer maturities and higher borrowing costs. Read more from 2017: Debt King Drahi Built a Cable Empire on Credit. Now What? Meanwhile, unsecured creditors, which include London-based credit investment manager Arini, will also get a cash repayment — albeit lower than the secured creditors — and an aggregate equity stake of 14%. Other members of the unsecured group include Rokos Capital Management, Castleknight Management, Finepoint Capital and T. Rowe Price, according to people familiar with the matter who asked not to be identified discussing private information. Representatives for Arini and Rokos declined to comment, while the rest didn't respond to requests for comment. The company also agreed to put back within creditors' reach assets it had moved elsewhere. To implement the deal, Altice France will use French court proceedings plus a Luxembourg reorganization or a US Chapter 11 filing for the holding company that issued the unsecured debt. Altice France is now asking all remaining creditors to sign up to the deal. Here's a look at some of the key terms: --With assistance from Abhinav Ramnarayan. (Updates to add names of unsecured creditors in 13th paragraph. Earlier versions of this story corrected the amount of unsecured debt to be reinstated and the names of unsecured creditors.) Trump's SALT Tax Promise Hinges on an Obscure Loophole Warner Bros. Movie Heads Are Burning Cash, and Their Boss Is Losing Patience Walmart Wants to Be Something for Everyone in a Divided America China Learned to Embrace What the US Forgot: The Virtues of Creative Destruction Meet Seven of America's Top Personal Finance Influencers ©2025 Bloomberg L.P. Sign in to access your portfolio
Bloomberg
27-02-2025
- Business
- Bloomberg
A Telecoms Tycoon Teaches the Bond Market a Lesson
Who'd have thought? Tycoon Patrick Drahi has pulled off a colossal restructuring of his debt-laden French telecoms empire, emerging as the victor. The debt market has been taught a lesson here, one it needs to remember for years to come. Altice France SA, owner of the SFR telecoms network, has €24 billion ($25 billion) of net debt and it's touch-and-go whether this is sustainable. In 2023, Drahi said he'd reduce borrowings by selling assets and buying back bonds trading below face value. Then came last March's shocking revision to the strategy: Altice wanted to cut debt more rapidly; investors would now likely be forced to bear losses. After months of talks, a majority of both senior and subordinated creditors agreed to rejig their claims on Wednesday.
Reuters
25-02-2025
- Business
- Reuters
Altice France close to debt-for-equity deal with creditors, sources say
PARIS, Feb 25 (Reuters) - Altice France is preparing to sign an agreement with its creditors to reduce the telecoms group's debt in exchange for a minority stake in the company, two sources close to the matter told Reuters on Tuesday, confirming reports from Bloomberg and Le Figaro. One of the sources said the agreement will involve a debt reduction of 8.6 billion euros ($9 billion), bringing consolidated net debt to 15.5 billion euros. Creditors will receive a 45% stake in total, including 31% for secured creditors. "(Founder) Patrick Drahi manages to retain control after a year-long battle," said the source. Altice France declined to comment. Bloomberg reported that the agreement will include changes in governance. The agreement has yet to be signed but is expected to be signed shortly, the two sources said. Altice, still headed by Drahi, has been in talks with its creditors for months in an effort to reduce its debt. Last March it sold French TV news channel BFM to Marseille-based shipping company CMA CGM for an enterprise value of 1.55 billion euros ($1.63 billion). ($1 = 0.952 euros)
