Altice NV is to spin off its US cable-television business, letting billionaire Patrick Drahi maintain control of both companies while he pursues a turnaround plan for the debt-laden European operation.
Altice’s 67 percent stake in Altice USA Inc is to be distributed to shareholders by the end of the second quarter, the companies said on Monday in a statement.
Drahi’s holding company will have at least 51 percent of the voting power of the US company after the transaction.
Before the spinoff, Altice USA will pay a US$1.5 billion dividend to shareholders, meaning the parent company gets a US$1 billion parting gift.
The split lets Altice USA continue on its expansion path unfettered by its parent company’s struggles in Europe, where Drahi is seeking to appease investors worried about debt that tops US$50 billion.
The billionaire has indicated he would like to participate in consolidation in the US pay-TV market and perhaps enter the wireless business there.
“This is an important moment for the group to focus on existing operations,” Altice USA chief executive officer Dexter Goei said on a conference call. “Over time we suspect that the clarity and simplicity of the structure will help our investor base be supportive of things going forward. The DNA of the group is to try and grow strategically over time.”
In August last year, Altice considered seeking funding to make a bid for Charter Communications Inc, the second-largest US cable company. The US unit of Drahi’s company has US$21.2 billion in debt, mostly from the acquisitions of Cablevision Systems and Suddenlink Communications in 2015 and 2016.
Shares of Altice USA have dropped 30 percent since the division’s initial public offering in June last year, giving the company a market value of US$15.5 billion. They rose 1.9 percent to US$21.50 in late trading on Monday.
In Europe, Drahi has made management changes, put a stop to acquisitions and committed to selling assets and bringing down leverage in the European business to four times earnings before interest, taxes, depreciation and amortization from about 5.1 times.
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