The standoff between billionaire Patrick Drahi and holders of $27 billion of debt at his French telecoms company is among 2024’s most intriguing financial dramas. Drahi is known nowadays as the owner of Sotheby's auctioneers, but AlticeFrance (aka French telco SFR) remains the cornerstone of his empire. With profits falling and interest rates rising, there’s a big question over whether Altice can refinance sizeable debts falling due in a few years.
Last year, Drahi indicated that he could sell assets and use the cash to buy back bonds trading below their face value: Investors would sell the debt back to the company at a discount, arithmetically reducing Altice’s liabilities. Voluntarily. But it seems this was an option rather than a definitive plan. In March, Drahi shocked the market with a more coercive and ambitious approach - using the loose terms of the debt to pressure some of his creditors into taking bigger losses than they were expecting to suffer.
The tycoon could emerge with his shareholding rescued from negative equity, while senior creditors join him in pressuring subordinated creditors to take a hit. Obvious lessons: read the fineprint, wargame the options.
To read my column at Bloomberg Opinion, click here: https://lnkd.in/eEr8X92F