**Altice International Restructures to Strengthen Financial Stability**
Altice International has taken significant steps to enhance its financial stability by designating two of its subsidiaries as unrestricted, effectively shielding them from creditor claims. This strategic move allows Altice Portugal SA, which oversees all operations in Portugal, and Altice Caribbean Sarl, responsible for activities in the Dominican Republic, to operate outside the constraints of existing financing agreements. As unrestricted subsidiaries, they can incur new debt, sell assets, or distribute dividends without lender approval.
In a related development, a division of Altice Portugal has successfully raised €750 million (approximately $870 million) in new debt. This funding is intended to address upcoming liabilities for Altice International and support general working capital needs. Furthermore, the company has indicated the potential to secure an additional €2 billion in debt at the Altice Portugal level, which would further enhance its liquidity.
This maneuver, known as a drop-down, is one of several aggressive strategies that companies can employ to manage financial challenges, particularly when facing a substantial debt burden. Altice International is currently navigating a significant net liability of €8.7 billion. Analysts have expressed concern over this strategy, suggesting it places creditors in a precarious position and may lead to a restructuring scenario. The decision to classify core assets in Portugal and the Caribbean as unrestricted has resulted in a high annualized net debt-to-Ebitda ratio of 26x for the remaining restricted group, primarily based in Israel.
Following the announcement, Altice International’s 5.75% dollar-denominated bonds, maturing in August 2029, saw a decline of over 7 cents, dropping below 67 cents on the dollar. In anticipation of potential debt negotiations, creditors have begun organizing, and three independent members have been appointed to the board of Altice International. Additionally, Altice Caribbean is now directly owned by Altice Group Lux Sarl.
The telecommunications firm has also initiated a strategic review of its asset portfolio, with plans to evaluate potential disposals in the coming years. In its third-quarter results, Altice reported a 12.1% year-on-year decline in earnings, despite a 4.2% increase in revenues. The company noted that its growing revenue streams have lower margins, compounded by rising operating costs.
**FAQ**
**What are unrestricted subsidiaries, and why are they important for Altice International?**
Unrestricted subsidiaries are entities that operate outside the constraints of existing financing agreements, allowing them to incur debt, sell assets, or pay dividends without lender approval. This designation is crucial for Altice International as it enables greater financial flexibility and the ability to stabilize its operations amid significant debt challenges.
