Form 4: Altice USA Director and 10% Owner, Next Alt S.a.r.l., Sells Shares to Repay Debt from Capped Call Transactions

Next Alt S.a.r.l., a 10% owner and entity related to director Patrick Drahi, sold shares of Altice USA to repay debt incurred from European capped call transactions.

Summary

• Next Alt S.a.r.l., an entity related to Altice USA director Patrick Drahi, filed a Form 4 detailing changes in beneficial ownership.
• The transactions involve the sale of Class A common stock to repay debt related to existing bilateral European capped call transactions.
• On November 1, 2024, Next Alt sold 268,409 shares at $23.3164, 268,409 shares at $24.5, and 268,409 shares at $25.6836.
• These sales resulted in a decrease in Next Alt's direct holdings of Class A common stock from 35,371,681 to 34,834,863 shares.
• The capped calls expire in equal tranches over a 42-day period starting October 25, 2024, and are automatically exercised upon expiration.
• Next Alt is required to deliver shares of Class A common stock to the counterparty based on the settlement price relative to the lower and higher strike prices of the capped calls.
• Patrick Drahi and Next Alt S.a.r.l. have granted Armelle Koelf power of attorney to execute and file necessary forms with the SEC.

Sentiment

Score: 5

Explanation: The document is neutral in tone, simply reporting transactions related to existing financial arrangements. The share sales could be seen as slightly negative, but they are part of a pre-planned strategy.

Risks

• The continued exercise and expiration of the capped calls could lead to further sales of Altice USA shares by Next Alt, potentially impacting the stock price.
• The complex nature of the capped call transactions and their settlement terms could introduce uncertainty for investors.

Future Outlook

The document indicates that capped calls will continue to expire over a 42-day period, suggesting further transactions involving the sale of shares are likely.

Industry Context

Capped call transactions are often used by companies or major shareholders to hedge against potential stock dilution or to raise capital without directly issuing new shares. The unwinding of these transactions can create selling pressure on the stock.

Comparison to Industry Standards

• Capped call transactions are a relatively common hedging strategy employed by large shareholders, similar to those used by entities associated with other publicly traded companies like Charter Communications or Comcast.
• The scale of the share sales is significant but not unusual for transactions related to unwinding large derivative positions; similar activity has been observed with major shareholders in companies like Liberty Broadband.

Related Party Transactions

• The transactions involve Next Alt S.a.r.l., which is an indirect wholly-owned and controlled personal holding company of Patrick Drahi, a director of Altice USA.

Stakeholder Impact

• Shareholders may experience short-term price volatility due to the ongoing share sales.
• The transactions could impact the overall supply and demand dynamics for Altice USA stock.

Next Steps

• Continued monitoring of Form 4 filings to track further transactions related to the capped calls.
• Analysis of the impact of these transactions on Altice USA's stock price.

Key Dates