Benzinga | Nov 23, 2020 07:12AM EST

Altice USA Announces Commencement Of Tender Offer To Repurchase Up To $2.5B Of Its Class A Common Stock

Altice USA, Inc. (NYSE:ATUS) ("Altice USA" or the "Company") announced today that it has commenced a modified "Dutch auction" tender offer to repurchase up to $2.5 billion of its Class A common stock at a price not greater than $36.00 per share nor less than $32.25 per share, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase and Letter of Transmittal that are being distributed to stockholders (the "Offer"). If the Offer is fully subscribed, the number of shares to be purchased in the Offer represents approximately 19.6% to 21.9% of Altice USA's issued and outstanding shares of Class A common stock (or approximately 12.8% to 14.3% of Altice USA's total outstanding shares including both Class A and Class B common stock) as of November 19, 2020 depending on the purchase price payable for those shares pursuant to the Offer. The Offer represents a premium of approximately 0% to 12% to the NYSE closing price of the shares on November 20, 2020 of $32.27 per share.

With this Offer, Altice USA is increasing its buyback target for full year 2020 from ? $2.0 billion to approximately $5.0 billion. From October 1, 2020 to November 20, 2020, the Company repurchased 22,677,812 Class A shares pursuant to its share repurchase program at an average cost of $29.10 per share for approximately $660 million (a total amount of approximately $2.5 billion year-to-date). As a result of the Offer, the Company now expects its 2020 year-end net leverage for the CSC Holdings, LLC debt silo to be between 5.0x to 5.5x Adjusted EBITDA (on a L2QA basis). The Company expects to return to its net leverage target for CSC Holdings, LLC of 4.5x to 5.0x over time.

On November 20, 2020, the Altice USA Board of Directors increased the capacity under the Company's existing share repurchase program from $5.0 billion to $7.0 billion in the aggregate of Class A shares to facilitate the Offer and any subsequent additional share repurchases (commencing at least ten business days following the expiration or termination of the Offer). As of November 23, 2020, the capacity under the Company's upsized share repurchase program was approximately $4.3 billion, or approximately $1.8 billion after the assumed repurchase of $2.5 billion of Class A shares pursuant to the Offer.

The Offer will expire at one (1) minute after 11:59 p.m., New York City time, on Monday, December 21, 2020, unless extended by Altice USA. Tenders of shares must be made prior to the expiration of the Offer and may be withdrawn at any time prior to the expiration of the Offer. The Offer will not be conditioned upon any minimum number of shares being tendered; however, the Offer is subject to a number of terms and conditions described in the Offer to Purchase, including the closing of the Company's sale of 49.99% of its Lightpath fiber enterprise business.

Tendering stockholders may specify a price not greater than $36.00 per share nor less than $32.25 per share (in increments of $0.25) at which they are willing to sell their shares pursuant to the Offer. On the terms and subject to the conditions of the Offer, the Company will designate a single per share price that the Company will pay for shares properly tendered and not properly withdrawn from the Offer, taking into account the total number of shares tendered and the prices specified by tendering stockholders. The Company will select the lowest purchase price, not greater than $36.00 per share nor less than $32.25 per share, that will allow it to purchase shares having an aggregate purchase price of $2.5 billion, or a lower amount depending on the number of shares properly tendered and not properly withdrawn (such purchase price, the "Final Purchase Price"). Only shares validly tendered at prices at or below the Final Purchase Price, and not properly withdrawn, will be eligible for purchase in the Offer. All shares acquired in the Offer will be acquired at the Final Purchase Price, including those shares tendered at a price lower than the Final Purchase Price. However, due to the "odd lot" priority, proration and conditional tender offer provisions described in the Offer to Purchase, all of the shares tendered may not be purchased if the number of shares properly tendered at or below the Final Purchase Price and not properly withdrawn have an aggregate value in excess of $2.5 billion (based on the Final Purchase Price).

The Company will purchase only those shares properly tendered and not properly withdrawn upon the terms and conditions of the Offer. All shares accepted for payment will be paid promptly after the expiration of the Offer period, to the seller in cash, less any applicable withholding taxes and without interest. At the maximum Final Purchase Price of $36.00 per share, the Company would purchase 69,444,444 shares if the Offer is fully subscribed, which would represent approximately 12.8% of the total issued and outstanding shares of Class A and Class B Common Stock as of November 19, 2020. At the minimum Final Purchase Price of $32.25 per share, the Company would purchase 77,519,379 shares if the Offer is fully subscribed, which would represent approximately 14.3% of the total issued and outstanding shares of Class A and Class B Common Stock as of November 19, 2020.

Shares not purchased in the Offer will be returned at the Company's expense promptly following the expiration of the Offer. The Company reserves the right, in its sole discretion, to change the per share purchase price options and to increase or decrease the aggregate value of shares sought in the Offer, subject to applicable law. In accordance with the rules of the U.S. Securities and Exchange Commission ("SEC"), the Company may purchase in the Offer up to an additional 2% of its outstanding shares without amending or extending the Offer.

The Company intends to pay for the purchase of the shares with cash on hand, cash from operations and, to the extent necessary, borrowings under its revolving credit facility.