January 9, 2018 / 4:56 PM / a year ago

LPC-Altice loans rebound on reorganisation announcement

Jan 9 (Reuters) - Netherlands-listed telecom group Altice’s leveraged loans rebounded strongly in Europe’s secondary loan market on Tuesday, on the back of the firm’s announced reorganisation on Monday that will see the US business spun off to existing shareholders.

Altice’s €300m 2026 term loan B was quoted at 99.75% of face value on January 9, while French subsidiary SFR’s €1.145bn B11 and €1bn B12 term loans were both quoted at 98.875, according to Thomson Reuters LPC data.

All three term loans recovered at least 150bp within the space of a day, up from 98.1%, 97.1% and 97.2% of face value respectively on Monday, TRLPC data shows.

The improvement in loan pricing follows a rebound in Altice’s shares after the announcement, which rose 10% on January 9 to €10.37 in afternoon trading.

The loans had traded above par until Altice issued a profit warning in early November 2017 following the loss of 75,000 customers in France in its third quarter results.

Following the announcement the loans plummeted and hit a low point on December 12, when Altice’s €300m facility dropped to an average bid of 96.45, over 350bp lower than on November 2, the day Altice issued the profit warning.

CEO Michel Combes resigned from the firm shortly after the third quarter results announcement, prompting Drahi to re-instate himself to everyday handling of the business as president.

Drahi then mooted the possibility of a restructuring of the business, which had pursued an aggressive acquisition strategy in recent years that brought its debt pile to €51bn — — more than five times its annual core operating profit.

The current reshaping includes the sale of Altice NV’s 67.2% holding in Altice USA business to existing shareholders. The listed US business, no longer owned by Altice NV, will then be shielded from concerns about the European operations.

A US$2bn share repurchase has also been agreed by Altice USA’s board of directors.

Altice said it would prioritise efforts to turn around its European operations.

Altice USA will pay a parting dividend of US$1.5bn to the European arm, to be named Altice Europe. Divestments of non-core assets, some of which are already under way, should also help to pay down debt, Altice said.

The two companies will be led by separate management teams with Franco-Israeli billionaire Drahi retaining control of both and garnering a large share of the dividend as well as the US$2bn share buyback planned by Altice USA.

Altice’s European business is set to be split between Altice France, Altice International and a newly created subsidiary Altice Pay TV.

The reorganisation is expected to be completed in the second quarter of 2018. (Editing by Claire Ruckin)

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