13 de enero de 2015 / 11:34 / en 3 años

Altice bond deal on ice until shareholder vote

* Delayed shareholder vote pushes back bond deal

* Jumbo transaction threatens to run into Greek election

* Market speculates on structure and price

By Robert Smith

LONDON, Jan 13 (IFR) - Portugal Telecom SGPS’s delayed shareholder vote has pushed back Altice’s hotly anticipated jumbo high-yield bond, potentially pegging the issue’s timing close to Greece’s general election.

High-yield bond investors had expected to see the deal of up to EUR5.7bn-equivalent backing the acquisition of Oi’s Portuguese operations this week, following a shareholder vote at Portugal Telecom SGPS on January 12.

The vote has now been delayed to January 22 at the request of a number of the company’s stakeholders.

“The expectation is that the bond is now pushed back,” said a banker on the deal. “The company is fine doing a deal while it’s still subject to antitrust clearance, but I don’t think they’d put money into escrow when it’s subject to an imminent vote.”

Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan and Morgan Stanley have underwritten the debt raising.

The delay means the company could miss a good window for cable and telecoms firms to issue, with Liberty Global launching multiple deals at its companies Virgin Media and Ziggo.

Having to run the deal after January 22 also means it runs close to Greece’s general election on January 25, which could spark market volatility if anti-bailout party Syriza triumphs.

“It’s true the Greek election is coming up, but if we’d announced the deal this week we’d have been running into the ECB meeting, you just have to live with those dates,” said the banker.

“This week is definitely a good week to issue a cable deal, but on the other hand we haven’t seen much volume yet. Coming to market after a few deals price and trade well could be even better for Altice.”

The other key date is February 13, when the company’s third-quarter numbers go stale, so it would have to update the documents supporting a new bond deal. Even if further delays meant the deal ran past this date, however, Altice is known for its speed in turning round deal documents.

GREAT EXPECTATIONS

The delays are frustrating for high-yield bond buyers, who have been keeping their powder dry for the deal while trying to second guess what form it will take.

Although it is widely expected to be US dollar heavy, due to the favourable cross-currency swap, Altice can raise debt at more than one entity.

The Portuguese assets will be bought by Altice International, which has acquired companies from Israel to the Dominican Republic using a mix of secured and unsecured bonds as well as syndicated loans.

But as with last year’s record-breaking Numericable-SFR deal, the Altice SA listed holding company could also be used to raise additional debt. This company sits above Altice France and Altice International, and raised EUR2.075bn and USD2.9bn of bonds to back part of Numericable’s purchase of SFR.

The banker said the uncertainty over the deal’s structure meant that Altice’s outstanding bonds were trading wider than fair value in the secondary market.

”People know a multi-billion dollar trade is coming, but as they don’t know the timing or structure nobody is stepping into the market to take the bonds back to fair value, he said.

“Altice senior secured bonds are trading around 6%, which makes no sense compared to where similar names are trading.”

One Altice bondholder said that while there was truth to this, there were other factors at play.

“Altice’s management are good, but they have lost some credibility with investors, which has driven the bonds wider,” he said.

“When they financed the SFR deal in April they told us there’d be no material acquisitions for a while, but then they announce this big Portuguese deal in the same calendar year. I understand why the goal posts may have moved, but as a bond investor you’re never going to like it.”

He added that his starting point for pricing on a new deal would be where the outstanding bonds are trading, not “where they should be trading”.

Altice declined to comment. (Reporting by Robert Smith, editing by Alex Chambers and Luzette Strauss)

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