Romain Rouillard / Photo credit: ERIC PIERMONT / AFP 17:25 pm, August 08, 2023

On July 13, Armando Pereira, the main right-hand man of Patrick Drahi, a Franco-Israeli businessman and owner of the Altice group, was arrested and imprisoned in Portugal for corruption and money laundering. A legal threat that hits hard an empire already weakened by a gargantuan debt.

Patrick Drahi had it bad this Monday when presenting the results of the second half for the entity Altice International, the empire he leads, built around the media (BFMTV and RMC) and telephony (SFR), among others. And the reason for his wrath went far beyond the original motive of the day's meeting. Because it was his first speech since the incarceration in Portugal of his right-hand man, Armando Pereira, accused of corruption and money laundering. Patrick Drahi claimed to have been "betrayed" by "a small group of individuals, including one of our oldest colleagues", was directly referring to his most loyal lieutenant.

The latter was caught by the patrol on July 13 in Portugal before being released on July 24 and then placed under house arrest pending trial. This 71-year-old businessman would have developed a financial package based on several companies - belonging to his relatives - which would have been granted privileges in the award of certain contracts. According to the Lusitano newspaper JN, these offshore companies would be "forty" and would have allowed "the concealment of more than 650 million euros".

Worried investors

The Portuguese tax authorities also suspect Armando Pereira of having received commissions via these shell companies as well as benefits in kind. In the sights of the authorities: an apartment located in Neuilly-sur-Seine, in the very chic western suburbs of Paris, which would have been acquired via one of these companies and then sold to Tatiana Agova-Bregou, executive director of content of the group and close to Armando Pereira. "If the suspicions of the tax authorities turn out to be true, it would mean that a small group of individuals hid their actions and profited from some of our acquisitions to the detriment of Altice and my reputation," Patrick Drahi thundered on Monday evening.

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In addition to possible moral damage, it is the financial consequences that worry the upper echelons of the group. Because to sustain its activities, it is essential that investors continue to buy bonds issued on the markets. However, the latter do not display confidence at all times. As proof, the Altice USA share - the only entity still listed on the stock exchange - contracted by 7% on Monday evening after Patrick Drahi spoke. Because the indictment of Armando Pereira comes at a time when the group must deal with a colossal debt, estimated at about 60 billion euros.

Asset disposals and reduction of investments

And if investors decide to shun the group's bonds, Altice will have to borrow more to continue operating. And thus deepen the said debt which amounts to 23.8 billion euros, only for the French branch. On Tuesday, in an attempt to reassure investors, Patrick Drahi indicated that his "only priority" was to alleviate this debt and promised, to achieve this, to sell assets (for example the sale of SFR's data centers) and to reduce the wing on future investments. It also remains to be seen what will happen to the media division, which is mobilizing significant funds, while the imperative of debt reduction appears more and more pressing.