(BN) Altice Plans $1.65 Billion Bond Sale to Cut Holding Company Debt (September 2019)2019-09-12
By Laura Benitez
(Bloomberg) — Phone carrier Altice France SA is hoping to raise 1.5 billion euros equivalent ($1.65 billion) of high-yield bonds to refinance costly debt held at the holding company of the group, which is owned by billionaire Patrick Drahi.
Proceeds of the planned sale will fully repay Altice Luxembourg SA’s dollar and euro notes maturing in 2022, with the remaining funds earmarked for the partial redemption of Altice France’s notes due 2024 and to pay transaction expenses, according to a bond prospectus seen by Bloomberg News. “This transaction is not a surprise as management made it clear in previous investors calls that it wanted to get rid of debt at the holdco level,” Jean-Rene Meduri, an analyst at Spread Research said in an interview. “Once they get net leverage to below 4x at the opcos, they can upstream cash.”
While cutting debt at the holding company level, the new bond issuance will result in Altice France’s ratio of debt to Ebitda — or leverage — increasing by about 0.3 times, according to people familiar with the matter. Altice’s leverage has been a key focus area for both bond and equity investors following an acquisition spree that’s driven group debt to 33 billion euros-equivalent, data compiled by Bloomberg show. Now the company will be hoping to take advantage of the current market window to secure new funds and make good on the promises to investors about cutting its more expensive debt.
“It’s the right time for them to begin reducing more costly debt, the market is very supportive and the company reported a better than expected 1H19 and increased guidance for 2019, » Meduri at Spread Research said.
The company was last in the bond market in May with a $3.1 billion cross-border offering via Altice Luxembourg. That deal was forced to price with a sizable premium to entice investors, who were cautious about buying debt from companies perceived to have fragile balance sheets.