Embattled telecoms group Altice has been forced to issue a statement addressing recent market speculation as its shares have continued to dive.
Companies are generally reluctant to respond to ‘rumours and speculation’, but if that speculation results in a self-reinforcing downward spiral for its she price then exceptions have to be made.
In this case there had been growing fears that heavily-indebted Altice might not have enough ready-cash to handle its financial obligations and may therefore have to flog some shares. Such a fire-sale would presumably have to be done at a discount, which seems to have been one of the reasons for the price drop. The company also moved to deny that Next Alt, founder Patrick Drahi’s company that is the largest Altice shareholder, is selling Altice shares.
Here are the issues the Altice announcement addressed:
- Altice is not in preparation of a cash raising by means of an equity- or equity-linked issuance and has no intention to pursue such action
- Next Alt S.à.r.l. (“Next”) does not have any margin loan exposure to Altice and has not sold any material number of shares since the IPO
- Management has not taken any active decision to sell Altice shares
- Altice plans to de-lever its balance sheet and does not have margin loan exposure within the group
It’s all very well trying to put current rumours to bed but they were themselves the product of a sequence of events that had already contributed to Altice shares losing more than half of their value in the latter half of this year alone. So the rest of the Altice announcement sought to clarify its current strategy.
In a nutshell it all comes down to paying down some of the €50 billion or so of debt it has accumulated in the acquisition of companies like SFR and Cablevision. Central to this, of course, is not adding to it, so Altice promises not to go on any shopping sprees anytime soon. Other than that it needs to sort out SFR, where most of the numbers seems to be going in the wrong direction, and flog some ‘non-core’ assets such as its tower portfolio.
Of course it’s never a good sign when a company has to whack out an emergency announcement saying everything’s cool, but investors do seem to have derived some reassurance from this one – pushing shares back up a bit. Other than that all Altice can do is start delivering on all the promises made when it started its M&A frenzy four years ago and, as a consequence, pay down some of that debt.
Here’s a vid from happier times, when Altice IPOed on Euronext.