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Altice loses major institutional shareholder
Fund manager Carmignac says November results were ‘game changer’
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Harriet Agnew in Paris and Robert Smith in London 9 MINUTES AGO 0
One of the largest shareholders in Altice has sold out of its position, new filings confirm, illustrating the challenges that billionaire Patrick Drahi faces in restoring confidence in his highly-leveraged telecoms and cable group.
French fund manager Carmignac Gestion had previously been one of Altice’s largest institutional shareholders, listed as holding a 3 per cent stake as of public filings from the end of September. The French group has now sold almost its entire position, according to new filings published on Thursday.
Carmignac bought into Altice at the initial public offering of its international entity, then known as Altice SA, in 2014, and sold out of the position in November, according to a person familiar with the situation. Ultimately it was a profitable investment for Carmignac, the person said.
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https://www.ft.com/content/15e92e62-1283-11e8-8cb6-b9ccc4c4dbbb
In January Mr Drahi, who has built Altice through a serious of acquisitions, announced that he would spin off Altice’s US business and restructure its European operations.
This marked the latest development in a torrid few months for Altice, which has seen its share price halve since early November. That month a poorly received trading statement, relating to disappointing performance in its largest French business SFR, sent the stock into freefall. This prompted the departure of chief executive Michel Combes and Mr Drahi’s decision to retake the reins of the company.
A person familiar with Carmignac’s thinking said that the “game changer” for its investment case in Altice was the poor result in France in November, as the group had put a lot of faith in Mr Combes’ ability to turn round operational performance in the country. Altice bought SFR, France’s second-biggest mobile operator, in 2014.
Carmignac was also concerned about Altice’s €51bn mountain of debt during a rising interest rate environment, the person said. The fund manager also believed that hope of consolidation in the French telecoms market, which Altice could have played a part in, had faded.
Carmignac is also a large holder of several of Altice’s bonds but, in contrast to its equity position, did not appear to sell significant amounts of this debt at the end of last year. Carmignac owns more than €200m of a €2bn bond from Altice Luxembourg, for example, and actually bought more of this debt at the end of last year, according to the filings.
Altice’s bonds have also come under significant pressure, with much of its debt now trading well below face value.
Carmignac and Altice declined to comment.