(Bloomberg) — Altice France moved some of the proceeds from a recent divestiture out of creditors’ reach as it prepares to start discussions over cutting its €24 billion ($26.2 billion) debt pile, according to people with knowledge of the matter.
The company shifted at least part of the proceeds it got from the €1.55 billion sale of Altice Media to an entity that sits above Altice France’s operations, said the people, who asked not to be identified discussing private information
Earlier, the money was in an unrestricted unit of Altice France that creditors could claim in the event of an insolvency or an in-court restructuring, the people said.
The move is another sign of the tough stance Altice plans to take with its creditors as it starts debt talks. In March, the company’s management told them in an earnings call that they would have to take a haircut to help the company reach a new leverage target.
Shortly after, creditors organized and tapped advisers. Earlier this week, the advisers entered into non-disclosure agreements to start debt discussions with Altice. The company needs to cut around €10 billion of debt to reach its leverage target.
Negotiations with a group of secured creditors holding around €17 billion of debt may prove particularly tough as creditors including Pacific Investment Management Co. and Anchorage Capital refuse to accept haircuts that would give Altice’s billionaire owner Patrick Drahi equity value at their expense, the people said.
Other members of the group — which is advised by Rothschild & Co. and Gibson Dunn & Crutcher — appear willing to accept a loss and move on, the people said. The vast majority of members have signed a cooperation agreement that binds them to not accept any offer unless 50.1% of the group accepts it.
Representatives for Altice France, Pimco, Anchorage, Gibson Dunn and Rothschild declined to comment. Representatives for Houlihan Lokey, Willkie Farr & Gallagher and Milbank, which are advising another creditor group, either declined to comment or didn’t respond.
The company is counting on €2.5 billion from asset sales —including its stake in La Poste Telecom that Bouygues Telecom is looking to buy — and about €1 billion from a dividend recap from XpFibre to potentially use in the discussions with creditors.
That €3.5 billion sum would meet a target Altice announced last August to cut leverage inorganically by one time its earnings before interest, taxes, depreciation, and amortization, but is below what it would have raised had the company managed to sell XpFibre, as Drahi was seeking.
–With assistance from Reshmi Basu, Giulia Morpurgo and Eleanor Duncan.
More stories like this are available on bloomberg.com