According to a report by Bloomberg on Friday, Altice USA (ATUS) is assessing options for its debt load with the help of Moelis & Co.
Bloomberg, citing people with knowledge of the matter, stated that the US division of billionaire Patrick Drahi’s telecommunications company has a debt pile of around $25 billion on a consolidated basis, company filings show. However, it isn’t facing any significant near-term maturities.
Altice USA shares dropped following the news, hitting a low of $1.84 per share. However, the stock has recovered most of those initial losses and is now down 0.5% at $2.04.
In a note to clients this week, Deutsche Bank noted that Altice USA’s management recently stated that they “are looking at all options to address our debt maturity profile and maintain a capital structure that best supports our long-term strategic objective”.
The bank believes that a seven times leveraged balance sheet is not a capital structure that best supports Altice’s long-term strategic objective, which “implies something more than simply extending maturities by issuing double-digit coupon paper or issuing high-single-digit coupon ABS bonds.”
Deutsche Bank said, “If Altice pursues such a strategy and is successful, it would potentially shift value from creditors to equity holders, potentially driving a significant increase in Altice’s share price.”
They added: “Altice currently has $25B in net debt and a $1B equity capitalization. For every $1B in par value of debt that can be eliminated, $2.13 in equity value would be created (assuming constant EV).”
