I noticed an article that said that Optimum (Altice USA) was in danger of being delisted from the New York Stock Exchange. NYSE automatically issues a warning to any stock when the average share price over thirty days is below $1.00. This warning was given to Optimum on August 13, and the company has until February 13, 2027, to get the 30-day average stock price above $1.00 to remain listed on the exchange.
The company’s stock has plummeted over the last year. A year ago, the stock was trading at $2.33 per share. Five years ago, the stock traded at more than $28 per share. As I wrote this blog, the share price was $0.89. The lowest price this year was $0.60 per share. Optimum stock is considered extremely volatile by analysts because the company had almost 50 days during the last year when the stock rose or fell by more than 5%. The changes aren’t always downward. In early June, the stock price rose more than 9% in one day on news that the company had grown to have 700,000 cellular customers.
On the surface, the stock price seems out of line for an ISP that had over four million customers at the end of the second quarter of this year. At the end of the second quarter of this year, the company had over four million broadband customers, but had lost 40,000 customers in the second quarter. The company is profitable. Second quarter EBITDA was $785.7 million, which was 2.2% lower than the previous quarter due to the customer losses. However, the company has trimmed operating expenses and capital expenditures to maximize cash flow. Unfortunately, those earnings are not enough for the company to get out of its current problems.
Optimum’s biggest problem is its debt load of $25.3 billion, with a debt payment of more than $6 billion coming due in 2027. The company is being prohibited from restructuring the debt due to a group of current Optimum lenders that have banded together and have an agreement among them that will not allow the company to restructure debt without supermajority approval from lenders. Optimum claims this is illegal price fixing and sued major investors including Ares Management, Apollo Global Management, and BlackRock. The suit, filed in New York federal court, accuses the companies of antitrust violations by creating an illegal cartel through the cooperative credit agreement.
The Dutch investment firm Next Alt S.à r.l, which is owned by billionaire Patrick Drahi, owns a majority interest in the company, with the remaining shares publicly traded. In June, Drahi tried to shake the bondholders loose from the consortium action by telling them that the company faced a $4 billion tax liability if it went to bankruptcy, a move that would greatly reduce any value to the bondholders in a bankruptcy process.
If the company is forced into bankruptcy, there is a growing circle of possible buyers for the company. At the end of the second quarter, the company had 3.1 million fiber passings out of 10.1 million total passings. The company has also convinced 9% of customers to bundle broadband with cellular service – the new convergence goal for ISPs.
But Patrick Drahi has been successful in the past in working his companies out of tight spots. But this seems like a situation that he probably can’t easily resolve.