Altice USA (ATUS) is evaluating options to address its debt load with Moelis & Co., according to a Bloomberg report Friday.
Bloomberg, citing people familiar with the matter, said the U.S. unit of billionaire Patrick Drahi’s telecommunications company has about $25 billion in debt on a consolidated basis, company filings show. However, it does not have any significant short-term maturities.
Altice USA shares fell following the news, hitting a low of $1.84 per share. However, shares have recovered most of their initial losses and are now down 0.5% at $2.04.
In a note to clients this week, Deutsche Bank noted that Altice USA management recently said it was “considering all options to modify our debt repayment profile and maintain a capital structure that best supports our long-term strategic objective.”
The bank believes that a balance sheet with seven times leverage is not the capital structure that best supports Altice’s long-term strategic objective, which “involves more than simply extending maturities by issuing double-digit coupon notes or issuing single-digit coupon ABS.” bonds”.
Deutsche Bank said: “If Altice pursues such a strategy and is successful, it would potentially shift value from lenders to shareholders, potentially leading to a significant increase in Altice’s share price.”
They added: “Altice currently has $25 billion in net debt and $1 billion in equity capitalization. For every $1 billion in face value of debt that can be liquidated, $2.13 in equity value will be created (assuming constant EV).”