Optimum Sues Creditors Over Alleged Antitrust Cartel Blocking Refinancing

Altice USA Inc., now known as Optimum Communications Inc., has filed a federal antitrust lawsuit against several major creditors, including Apollo Capital Management LP, Ares Management LLC, and BlackRock Financial Management Inc. The suit claims the firms colluded to form an illegal cartel that allegedly froze the company out of the U.S. credit market. The lawsuit, filed in a New York federal court, is the first of its kind brought by a borrower against creditors for coordinating their actions under a cooperation agreement according to reports.

Optimum alleges the creditors formed a "cooperative" in July 2024, which required a two-thirds supermajority vote before any refinancing deal could proceed. This arrangement reportedly prevented individual lenders from negotiating with the company independently and forced Optimum to accept terms dictated by the group. The firm claims this behavior violates both federal and New York antitrust laws and disrupts normal capital market operations as research shows.

The lawsuit comes just one day after Optimum announced it would repay a $1.9 billion term loan two years early. The company claims this decision was necessary due to the restrictive nature of the cooperation agreement, which allegedly made it impossible to secure favorable financing from existing lenders. The early repayment, however, came at a higher cost than it would have under a typical refinancing deal according to Bloomberg.

Why the Standoff Happened

Optimum has been under pressure to restructure its $26 billion in debt for over a year, with advisers brought in to evaluate options as early as May 2024. By June of that year, a group of lenders had already begun consulting legal counsel over concerns that Optimum might attempt to shift assets or restructure in a way that would limit their recovery according to Bloomberg reports. The resulting cooperation agreement, designed to give creditors a unified front in negotiations, became the focal point of the legal battle.

Legal experts have long warned that creditor pacts like these could skirt antitrust protections. Cooperation agreements typically allow creditors to act collectively rather than individually, increasing their leverage in negotiations. Optimum's lawsuit argues that the arrangement goes beyond coordinated negotiation and into the realm of anticompetitive behavior according to industry analysis.

How Markets Reacted

The legal filing has already triggered uncertainty in the credit markets. Some of Optimum's debt instruments saw sharp price declines following the announcement. For instance, a 5.375% bond due in 2028 fell by 2.75 cents on the dollar to around 76 cents, according to Trace pricing data. The broader leveraged loan market is also watching closely, as a ruling in favor of the borrower could set a precedent affecting out-of-court restructurings across the industry.

This situation has also drawn attention to the role of asset managers in corporate debt negotiations. Firms like Apollo, BlackRock, and Ares collectively control a large portion of the credit market tied to Optimum's refinancing needs. The complaint claims the group's actions effectively starved the company of capital until it had to capitulate to their terms according to industry reports.

What Analysts Are Watching

Industry observers are closely monitoring the legal and economic implications of the case. One key concern is whether courts will uphold the legal validity of creditor cooperation agreements, which have become increasingly common in recent years. If Optimum's lawsuit succeeds, it could force creditors to reconsider the scope of such pacts and potentially open the door to more litigation from borrowers in distress.

Additionally, the case highlights the tension between creditors' rights and borrower protections in the capital markets. While creditors argue that cooperation is necessary to protect their interests, borrowers like Optimum claim that such arrangements distort market competition and inflate borrowing costs. A favorable outcome for the borrower could signal a shift in how courts view these arrangements according to legal experts.

Optimum has also pointed out that it had to seek alternative financing, including a $1 billion asset-backed term loan facility with Goldman Sachs and TPG Angelo Gordon. This loan came with an interest rate two to three percentage points higher than what the company could have secured through its existing lenders, according to the complaint.

Risks to the Outlook

If the court sides with the creditors, it could embolden lenders to form more such cartels in the future, potentially making it even harder for distressed borrowers to restructure their debt on favorable terms. Conversely, a ruling in favor of Optimum could lead to increased scrutiny of creditor pacts and push lawmakers to consider reforms to antitrust regulations.

Optimum, for its part, has emphasized that it remains financially stable and able to meet its current obligations. However, the company warns that being blocked from refinancing increases its risk of insolvency. The outcome of this case could have far-reaching consequences for corporate debt markets and the balance of power between borrowers and lenders according to industry analysis.