Form 4: Altice USA Director Next Alt S.a.r.l. Executes Capped Calls, Repays Debt with Class A Common Stock

Next Alt S.a.r.l., a 10% owner and director of Altice USA, Inc., executed capped call transactions and repaid debt by delivering Class A common stock.

Summary

• Next Alt S.a.r.l., an indirect wholly-owned and controlled personal holding company of Patrick Drahi, a director of Altice USA, Inc., filed a Form 4.
• The form details transactions related to the exercise and expiration of capped call options on October 28, 2024.
• Next Alt repaid debt to a financial institution by delivering 268,409 shares of Class A common stock at prices of $23.3164, $24.5, and $25.6836 per share.
• These transactions are related to existing bilateral European capped call transactions with a financial institution counterparty, covering a total of 33,819,573 shares of Class A common stock.
• The capped calls expire in equal tranches over a 42-day period, beginning October 25, 2024, and are automatically exercised upon expiration.
• Following the reported transactions, Next Alt beneficially owns 38,055,771 shares of Class A common stock directly.
• Next Alt also holds call options (obligation to sell) for 32,209,119 shares of Class A common stock.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The document reports transactions related to capped calls and debt repayment, which are standard financial activities. There are no explicit positive or negative indicators, but the potential for dilution from the capped calls is a mild concern.

Risks

• The capped call transactions could potentially dilute existing shareholders if the settlement price exceeds the higher strike price.
• The automatic exercise of the capped calls upon expiration could create selling pressure on the stock.

Future Outlook

The capped calls will continue to expire in tranches over the next 42 trading days, potentially impacting the stock price.

Management Comments

• Each Reporting Person disclaims beneficial ownership of all interests reported on this Form 4 except to the extent of such Reporting Person's pecuniary interests.

Industry Context

Capped call transactions are often used by companies and major shareholders to hedge their positions or raise capital without immediately diluting existing shareholders. The use of capped calls suggests a strategy to manage risk and potentially monetize a portion of the shareholding.

Comparison to Industry Standards

• Capped call transactions are a relatively common hedging strategy employed by large shareholders and companies.
• Similar transactions have been undertaken by other companies with concentrated ownership structures to manage potential dilution and volatility.
• The specific terms of the capped calls (strike prices, expiration dates) would need to be compared to similar transactions to assess their relative favorability.

Stakeholder Impact

• Shareholders may experience dilution if the settlement price of the capped calls exceeds the higher strike price.
• The debt repayment benefits creditors of Next Alt S.a.r.l.

Key Dates