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(Bloomberg) -- Altice France SA and a majority of its creditors reached an agreement to slash the company’s debt by €8.6 billion ($9 billion), letting founder Patrick Drahi keep control of the cable and mobile-phone operator he built through years of acquisitions.
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The deal resolves one pressing issue between Drahi and the lenders who financed deals such as his 2014 purchase of French wireless company SFR. Altice France racked up a €24 billion debt load at a time of ultra-low interest rates, only to see bond holders turn queasy as borrowing costs rose and the business underperformed.
The 61-year-old Franco-Israeli billionaire still has to find agreement with creditors on other fronts: His Altice USA business has been holding confidential discussions over how to address its debt pile. Meanwhile, talks are expected to kick off soon on Altice International, which operates in Portugal, Israel and the Dominican Republic.
“It is impressive to see that Drahi managed to retain control of the entity here,” said Vincent Benguigui, a high-yield portfolio manager at Federated Hermes. “The situation makes credit more palatable. It will probably attract many high-yield investors back.”
Secured creditors including BlackRock Inc., Elliott Investment Management and Pacific Investment Management Co. will get a minority equity stake in Altice France while Drahi will own 55%, according to a statement confirming a Bloomberg News report from Tuesday. Unsecured creditors also will get equity.
Altice France’s bonds rose following the announcement. The 5.875% secured bonds due in 2027 gained more than 5 cents to 90, while the unsecured notes due in February 2028 gained more than 2 cents to 30, according to Bloomberg pricing.
The deal caps a tumultuous year. Altice France told creditors in March last year they would need to accept a lower value for their bonds to reduce the company’s leverage to below four times its earnings, and that it had shifted assets outside of their reach, which could potentially be used as part of a negotiation.
The bonds sold off as creditors became concerned about potential maneuvers by Drahi that could hinder their position. However, eventually the parties aligned on a consensual deal, for what remains one of the largest junk-rated corporate debt piles in Europe. The agereement puts governance checks in place and tighter rules regulating the debt contracts.