Altice SFR France - comment

The opening bell of negotiations between Drahi and creditors has rung, with the Company/Drahi floating a proposal to the steering creditor committee.  The proposal appears light with no fresh equity coming from Drahi.  Creditors would receive 10-15% of the equity in exchange for write-off of principal, extension of maturities and a lower interest rate than the existing debt.  

This is slightly better than the previous kite-flying from the Company of 20% haircut, but frankly, we can’t see this proposal being met with any enthusiasm.  Opening gambit from creditors had Drahi losing majority control of SFR, without the introduction of new capital.  

Bonds have moved up a couple of points on the expectation that the steering committee are asked to engage on negotiations.  

We will write a more detailed note later today on this proposal and potential way forward for both groups.