Altice France - comment

Moody’s downgraded Altice France’s outlook to negative on the back of Q2 numbers which highlight the continued weak operating performance and the lack of visibility of arresting the decline. Moody’s reiterates the Company’s guidance that they are working on a combination of asset disposals, equity raising and/or debt buybacks to reduce leverage by 1.0x over the next 12 months. However, we reiterate our scepticism on the probability of this, considering the overall leverage at the senior level and the likely difficulty of buying back at the sub-level, because of upcoming maturities and refinancing needs at the senior level. 

The springing maturities for the RCF at both the Altice France and the holding Company level are at 5.25x and 5.75x, but Moody’s discloses that they understand the Company has additional flexibility to comply with this covenant, given that the calculation excludes the debt under the credit basket which is equivalent to almost 1x of leverage. This concurs with our frustration at the Company that they will not disclose to us the full extent of the availability of these RCFs.