Optimum Communications Nears Deal to Give Creditors Control

what happened

Optimum Communications, a U.S. broadband provider, is nearing a debt restructuring agreement. Under the proposed deal, control of the company would pass to its lenders, and the litigation between the two sides would end. The Wall Street Journal reports this citing people familiar with the matter.

According to the paper, equity would go to a group of major lenders including Apollo Global Management, Oaktree Capital Management and JPMorgan Chase. Negotiations are ongoing and the final terms could still change. Patrick Drahi, the French telecom billionaire who owns Optimum, is reportedly broadly aligned with the terms.

The dispute began last year when Optimum sued its creditors, alleging antitrust violations. The lenders denied the claims and countersued in New York state court, accusing the company and its founder of fraudulently moving billions of dollars in assets out of their reach.

why it matters

The company owes more than $26 billion, with about $6 billion due in 2027. Handing control to creditors means bondholders and loan holders effectively take over the business in exchange for their claims, which matters for investors in U.S. high-yield telecom debt. Creditors also allege that key assets were moved into a new subsidiary, a point that could shape further court proceedings.

market impact

Optimum creditors and high-yield debt markets: the deal shifts control and removes the litigation risk

tags

instruments