A group of investors holding roughly $9 billion of Altice International bonds delivered a default notice Tuesday, alleging the telecommunications operator breached debt agreements through complex intercompany loans and asset transfers. The creditors claim Altice moved valuable assets — including its Portuguese and Dominican Republic operations representing about 80 percent of earnings — out of their collateral pool while advancing more than $4.5 billion in intercompany loans to other entities within founder Patrick Drahi's telecom empire.
Bondholders holding $9 billion of Altice International debt delivered a default notice Tuesday, alleging the telecom operator breached credit agreements through $4.5 billion in intercompany loans and asset transfers that stripped collateral from creditors.
"The transactions systematically removed the assets that underpinned our security package," a person familiar with the creditor group's position said. The group includes London-based credit funds Sona Asset Management and Arini Capital Management, along with King Street Capital Management.
Since 2021, Altice International advanced more than $4.5 billion in intercompany loans to entities within Drahi's empire, including Altice Luxembourg, which held over half the shares in Altice France. Those shares were transferred last year and are no longer available as collateral, the people said. Altice also transferred its stake in a German joint venture with Vodafone without receiving apparent compensation, while a merger of its Dominican Republic business with an affiliate acted as a dividend that moved value away from creditors. The Portuguese affiliate was similarly stripped from the collateral pool and used to secure new debt.
The default notice threatens to trigger a prolonged legal battle that could force immediate repayment demands, potentially cascading through Drahi's $60 billion debt empire. Altice France is already in the midst of a $23 billion acquisition by a consortium of European telecoms, and Altice USA's Optimum Communications — carrying $25 billion in debt — shifted its own assets out of creditors' reach last month.
The secured creditors have formed a cooperation agreement extending through January 2028, with an option to prolong until August 2029, aligning with the maturity dates of their debt instruments. The pact signals the group is prepared to pursue contractual and legal remedies after months of unsuccessful attempts to engage Altice International over upcoming debt maturities, according to people familiar with the matter.
The Portuguese and Dominican Republic operations at the center of the dispute account for roughly 80 percent of Altice International's earnings and had been pledged as collateral until the end of 2025 before being removed through a "drop-down" transaction completed late last year. The creditors' notice also highlights approximately 5 billion euros in inter-company loans that allegedly reduced the group's value available to lenders.
The dispute mirrors tensions at Altice USA, where Optimum last month launched equity deals backing a new subsidiary that could allow it to incur additional debt and address near-term maturities. Optimum earlier filed an antitrust lawsuit against its own creditors, alleging their cooperation agreement illegally fixed prices on the company's debt.
Drahi last year reached a 24-billion-euro restructuring deal with creditors of his French business, transferring a 45 percent stake in exchange for reducing debt to 15.5 billion euros. Both the creditor group and Altice International declined to comment on the current default notice.
This article is for informational purposes only and does not constitute investment advice.
