IFR International - 21.07.2018

„ FRONT STORY HIGH-YIELD DEBT

Altice pays to push out maturities

Cable company returns for first deal since last year’s woes

Both deals upsized but attractive pricing

!TTRACTIVEûLEVELSûONû!LTICESûlRSTû%UROPEANû
OUTINGûSINCEûITSûWOESûLASTûWINTERûHELPEDûTHEû
TELECOMûCOMPANYSû&RENCHûOPERATIONSûPUSHû
OUTûITSûDEBTûMATURITIES ûWITHûANALYSTSûSEEINGû
THEûDEALûASûTHEûlRSTûSTEPûINûBROADERû
RElNANCINGûEFFORTS
ALTICE FRANCEûRAISEDû53BNûATûû
ANDûõBNûATû ûWITHûBOTHûTRANCHESûINû
YEARûNON
CALLû
YEARûSENIORûSECUREDûFORMAT
4HEûTRADEûWASûUPSIZEDûFROMûTHEûORIGINALû
53BNûANDûõMûMARKETEDû0RICINGû
CAMEûATûTHEûTIGHTûENDûOFûûAREAûTALKûONû
THEûDOLLARSûANDûûAREAûONûTHEûEUROS
!LTICEûSHOOKûINVESTORûTRUSTûINû.OVEMBERû
WHENûITûRELEASEDûDISAPPOINTINGûTHIRD
QUARTERû
RESULTSûTHATûSHOWEDûTHEûCOMPANYûLOSINGû
CUSTOMERSûTOûRIVALSûSUCHûASû)LIAD û"OUYGUESû
4ELECOMûANDû/RANGE
.OW ûAFTERûWATCHINGûYEARSûOFûDEBT
FUELLEDû
ACQUISITIONS ûINVESTORSûWANTûTOûSEEû!LTICEû
TRIMûDOWNûITSûõBNûORûSOûDEBTûSTACKû
!LTICESûDEBTûEQUALSûMOREûTHANûTWICEûITSû
ANNUALûREVENUES ûACCORDINGûTOû2EUTERS
h7EûVIEWûTHISûRElNANCINGûASûANû
OPPORTUNISTICûMOVEûDESIGNEDûTOûHELPûREBUILDû
INVESTORûCONlDENCEûINûTHEû!LTICEû%UROPEû
NARRATIVEûAHEADûOFûBOLDERûRElNANCINGû
MOVES vû#REDIT3IGHTSûANALYSTSûWROTEûWHENû
THEûDEALûWASûOUTûINûTHEûMARKET
4HEûCOMPANY ûWHICHûISûUSINGûTHEûPROCEEDSû
TOûREDEEMûITSûõBNûûANDû53BNûû
SENIORûSECUREDû-AYûS ûHADûORIGINALLYû
PLANNEDûTOûLEAVEûõMûANDû53MûOFû

THOSEûNOTESûOUTSTANDINGûACCORDINGûTOûTHEû

NOTESûPROSPECTUSûBUTûTHEûUPSIZEûMEANSûBOTHû

BONDSûWILLûBEûRElNANCEDûINûFULL

3TILLû!LTICEûPAIDûUPûSIGNIlCANTLYûTOûLUREû

INVESTORS

h4HISûDEALûTERMSûOUTûTHEûDEBTûWHICHû

MANAGESûTHEûûSTACKûWHICHûISûAûBIGû

MATURITYûCONCERNû4HEYREûALSOûNOTûPRINTINGû

FARûOFFûFROMûWHEREûTHEûHOLDCOûBONDSûAREûSOû)û

THINKûITSûPRETTYûATTRACTIVEvûONEûINVESTORû

SAIDûDURINGûMARKETING

!ûõBNûû-AYûûNOTEûISSUEûVIAû

HOLDCOû!LTICEû,UXEMBOURGûWASûBIDûATûû

WHILEûTHEûNEWûDEALûWASûBEINGûMARKETEDû

ACCORDINGûTOû4RADEWEBûDATAû4HEûYIELDûONû

THEûDOLLARûPORTIONûONûTHEûOTHERûHANDûWASû

THEûHIGHESTûTHEû&RENCHûUNITûHASûEVERûPAIDûINû

THEû53ûMARKET

QUESTION MARKS

"UTûTHEûAMOUNTû!LTICEûHADûTOûPAYûUPûTOûGETû

THEûTRADEûLEDûSOMEûINVESTORSûTOûQUESTIONûTHEû

TIMINGûOFûTHEûDEAL

-ARKû"ENBOWûINVESTMENTûMANAGERûATû

+AMESû#APITALûQUESTIONEDûWHYûTHEû

COMPANYûWASûRElNANCINGûDEBTûTHATûDOESûNOTû

MATUREûFORûANOTHERûFOURûYEARS

(EûASKEDûWHYû!LTICEûDECIDEDûTOûNOTûONLYû

PAYûAûCALLûPREMIUMûNEARLYûTHREEûPOINTSû

ABOVEûPARûONûBOTHûDUEûûNOTESûBUTûALSOû

ACCEPTûAûHIGHERûCOSTûOFûDEBT

/NûTHEû53ûDOLLARûTRANCHEûITûISûAROUNDûBPû

HIGHERûTHANûONûTHEûBONDSûBEINGûRElNANCED

h)FûMANAGEMENTûTRULYûBELIEVEûINûANû

OPERATIONALûTURNAROUNDûTHENûWHYûNOTûWAITû

ANOTHERûûTOûûMONTHSûLEAVINGûPLENTYûOFû

TIMEûTOûRElNANCEûATûAûPRESUMABLYûMUCHû

LOWERûCOSTûOFûDEBTvû"ENBOWûASKEDûINûAûNOTE

)NVESTORSûALSOûRAISEDûQUESTIONSûAROUNDû

HOWû!LTICEûWILLûUSEûPROCEEDSûFROMûITSûRECENTû

ASSETûSALES

3OMEûBONDHOLDERSûHADûHOPEDûPROCEEDSû

FROMû!LTICEû&RANCESûSALEûOFûSTAKESûINûITSû

TELECOMûTOWERSûBUSINESSESûTOûPRIVATEûEQUITYû

lRMûKKRûWOULDûGOûIMMEDIATELYûTOWARDSû

PAYINGûDOWNûAûPORTIONûOFûTHEûCOMPANYSûDEBT

!LTICEûENTEREDûANûAGREEMENTûWITHû++2ûINû

*UNEûTOûFORMûAûNEWû&RENCHûCOMPANYûCALLEDû

SFR TOWERCOû++2ûWILLûHAVEûAûûSTAKEû4HEû

BN

EQUIVALENTûDEALûISûEXPECTEDûTOûCLOSEûINû

THEûFOURTHûQUARTERûOFû

!LTICEûFOUNDERû&RENCH

)SRAELIû0ATRICKû

$RAHIûHASûPLEDGEDûTOûSHIFTûTHEûCOMPANYSû

FOCUSûFROMûLARGEûACQUISITIONSûTOûSALESûGROWTHû

ANDûDEBTûMANAGEMENT

"UTûONûAûCALLûWITHûBONDûINVESTORSû-ONDAYû

THEûCOMPANYûSUGGESTEDûITûMIGHTûKEEPûTHEû

CASHûONûTHEûOPCOSûBALANCEûSHEETûFORûTHEûNEXTû

FEWûQUARTERSûAûSECONDûINVESTORûTOLDû)&2

h4HEYûWEREûPRETTYûCAGEYûABOUTûWHATûTHEYû

WEREûGOINGûTOûDOûWITHûTHEûPROCEEDSvûTHEû

INVESTORûSAID

4HEûRElNANCINGûOFûTHEûSûCAMEûWITHûAû

53BNû4ERMû,OANû"ûOFFERINGûONû4UESDAYû

WITHûTHEûPROCEEDSûSETûTOûREPAYûAûPORTIONûOFûTHEû

53ûDOLLARûSû4HATûLOANûWHICHûMATURESûINû

ûWASûINCREASEDûFROMû53BNûANDûWASû

PRICEDûATûAûMARGINûOFûBPûOVERû,IBORûBUTû

WIDENEDûFROMûANûINITIALûOFFERûOFûBP

NEXT STEPS

4HEûNEXTûSTEPûANALYSTSûAREûAWAITINGûISûHOWû

!LTICEûWILLûTACKLEûTHEûRESTûOFûITSûDEBTûSTACK

!NALYSTSûATû#REDIT3IGHTSûSAIDûTHEYûEXPECTû

!LTICEûTOûSIMPLIFYûITSûCAPITALûSTRUCTUREûBYû

RElNANCINGûHOLDCOûDEBTûATûTHEû!LTICEû

,UXEMBOURGûLEVELûANDûREPLACEûITûWITHûMOREû

OPCOûDEBTûATû!LTICEû&RANCE

(OWEVERûANOTHERûINVESTORûSAIDûTHEû

RElNANCINGûCOULDûALSOûBEûACHIEVEDûTHROUGHû

NEWûHOLDCOûDEBT

!LTICEûHASûSENIORûUNSECUREDûõBNû

ûANDû53BNûûNOTESûATûTHEû

HOLDCOûLEVELûDUEûINû-AYûû4HEûCALLûPRICEû

ONûTHOSEûNOTESûFELLûTOûûINû-AYûANDû

FALLSûTOûûINû-AYûûACCORDINGûTOû

4HOMSONû2EUTERSûDATA

Goldman Sachs "$  ûBNP ParibasûBarclaysû

CitigroupûCredit AgricoleûCredit SuisseûDeutsche

BankûINGûMorgan Stanley, RBC ANDûSociete

Generale WEREûBOOKRUNNERS

Yoruk Bahceli, Eleanor Duncan

BONDS

SSAR  Corporates  FIG  Covered Bonds  High-Yield  Structured Finance 

Note: Based on indicative information, assumes new term loan

and ‘27s are used to refinance outstanding ‘22s

Source: Preliminary OM, CreditSights

2019 2020 2021 2022 2023 2024 2025 2026 2027

10

8

6

4

2

0

RCF Term Loans Senior Sec Bonds

€bn

ALTICE FRANCE PRO FORMA MATURITY SCHEDULE

Source: Thomson Reuters

4

5

6

7

8

06/02/20106/03/201806/04/201807/05/201806/06/201806/07/2018

8

06/10/201706/11/201706/12/201708/01/2018

%

TOUGH TIMES
THE YIELD ON ALTICE FINCO €675m 4.75%
JANUARY 2028s