💥Sub-Optimum💥
The worlds of LME and Antitrust collide, as foreshadowed.
⏩One to Watch: Optimum Communications Inc. ($OPTU) ⏩
Here we go again. Hot off the heels of Selecta Group B.V.’s (“Selecta”) excluded noteholder complaint, a new antitrust suit has graced the Southern District of New York’s docket.
This one was filed by the actual borrower. On November 25, 2025, broadband telecommunications co. and former-Altice Group Lux Sàrl-owned Optimum Communications, Inc. ($OPTU) and its sub CSC Holdings, LLC (collectively, “Optimum” or the “company”), represented by elite lit boutique Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C. (“Kellogg”) (Joshua Branson, David Schwarz, Thomas Schultz, Kyle Grigel, Brenna Darling, Jarrod Nagurka), sued Apollo Capital Management, L.P., Ares Management LLC, BlackRock Financial Management, Inc., GoldenTree Asset Management LP, J.P. Morgan Investment Management, Inc., Loomis, Sayles & Company, L.P., Oaktree Capital Management, L.P., PGIM, Inc., and Doe Entities #1-#1000 (collectively, the “defendants”) for agreeing “… to freeze Optimum out of the U.S. credit market.”*
Sounds sooooooo nefarious. You’d think the defendants, which own practically all of the company’s debt and compose the group’s steering committee, had done something proactive to stop Optimum from, you know, refinancing or paying off its debt at par.
Not even. Instead, the defendants signed up a cooperation agreement (the “coop”) ~1.5 years ago and, thereby, avoided a race-to-the-bottom “liability management” exercise as among themselves. Here’s the filler-filled, ninety-one page complaint …
… and, to save you the energy, here’s the gist:**
📍On October 9, 2015, the company entered into a JPMorgan Securities LLC-agented credit agreement, under which more than $6.5b is outstanding today (~$1.7b in revolving loans, ~$4.8b in term loans). In addition to that, the company has ~$10.7b in senior guaranteed notes spread across eight series and ~$6.1 billion in senior non-guaranteed notes across four.
📍In April ‘24, Optimum “… began receiving overtures from creditors about potential LME” … buuuuuuuttt before it could get there …
📍On July 3, ‘24, the defendants executed the coop, which contains precisely the terms distressed/restructuring nerds like you would (or should) expect. It …
Hmmm. A lot of those seem market-standard in company-negotiated restructuring and transaction support agreements. Here is Optimum responding to Johnny’s request for comment:
Really sucks to be on the outside, don’t it, Optimum?
Anyway, the company asserts the agreement “… snuffed out Optimum’s negotiations with creditors” because, as a practical matter, it meant the company had to deal with one, massive lender rather than several with smaller, more scattered holdings that could be pitted against one other.
📍As a result, Optimum has had a more challenging time raising capital. For example, earlier this year, it had to resort to a “liability managing” dropdown:
“In July 2025, Optimum engaged in an asset-backed private financing by moving network assets and customer contracts from the Bronx and Brooklyn to a separate, bankruptcy-remote entity to support a $1 billion loan. Because the Cooperative decimated the pool of potential lenders, Optimum had to pay an interest rate that far exceeds the rate on similarly rated loans issued in comparable circumstances. According to a contemporaneous estimate from a third-party advisor, Optimum had to pay the lender roughly 200 basis points more than ordinary market rates for similarly rated loans. Further, Optimum had to agree to atypical non-economic terms that limited its flexibility to borrow additional amounts against those assets, even though they were rated for significant additional capacity.”
No bueno for the company … even though it was, of course, still able to move around assets and raise cash. Regardless, under its theory, that is evidence of the group’s excessive, antitrust-violating market power.
But which market exactly? Per Optimum, there are “at least” two: (i) the leveraged debt financing market broadly, where Optimum is a buyer of credit and the lenders sellers … and (ii) the market for “… outstanding Optimum debt,” in which “… Optimum engages in post-issuance transactions with creditors who hold Optimum’s debt to repurchase, refinance, exchange, or amend that debt.”
Wait.
Because, on the first, one could argue Optimum impaired Optimum’s ability to access to the leveraged debt financing market, 🤷♀️. The market clearly exists – the complaint pegs it at $1.6t as of the end of ‘24 – but the lenders and its other participants also clearly think the company can’t support its already-incurred-but-not-yet-defaulted cap stack.
As for that second, could the “market” be any more narrow?
We aren’t the only ones who think so. Here’s Selendy Gay PLLC’s Jennifer Selendy on Bloomberg’s FICC Focus podcast:
“You know, so I’m a bit of an antitrust nerd. And I think that, let’s just start out with the notion of like a single company’s debt being a product market. That is already on the very periphery of antitrust doctrine, right?
So we have some limited cases … There is no precedent that is really close to this. So then you’re in the realm, of like, the antitrust principles and the vapors that come off the big antitrust cases. And so, I mean, I was very skeptical of the idea of a single company’s debt, an instrument, a particular instrument being a product market.
And I think one real hurdle, or one real big problem for it is, if what’s happening is just a straight up breach of contract, and you’re trying to argue that as an antitrust violation with respect to a single credit ….
And if the court can look at that and say, well, but wait a second, if what they’re doing is a violation of the credit agreement, then you have a remedy for that. You’re not stuck in a situation where they can force you to accept their deal or go because you can sue them, right? So I think there has to be a presumption that it … is or it is not allowed under the credit agreement. And I find it hard to superimpose an antitrust framework on top of that.”
👏. Honestly, the entire segment with Ms. Selendy is worth listening to. But, getting back on track, more than anything, we reckon the company is just pissed it can’t kick back and watch the action unfold …
Because it’s … uh … not in a great spot. Per the complaint:
“The Cooperative knows that Optimum has no other feasible refinancing sources, and it is leveraging its power accordingly.”
LOL, heck yeah, lenders, good on ya. If we owned the debt, we sure as sh*t would too.***
In any event, the leveraged loan market hasn’t stopped working for other new-money borrowers, provided they can (or are believed to be able to) support their debt. A “problem” only emerges for borrowers locked out because they, well, can’t. Sorry, Mr. Nemecek, we simply aren’t buying the notion that it is a place where antitrust law needs to intervene.
The rest of the complaint sounds in (i) policy, (ii) general aspersions toward the bankruptcy process (🖕, Kellogg),**** and (iii) a viewpoint that, by banding together and sidestepping an LME battle royale, the lenders (a) “rewrote” the loan docs, despite borrower-free, lender-with-lender agreements being, to pilfer the complaint’s terminology, “… market-standard …,” and (b) prevented the company from exploiting the loan docs’ “flexibility.”
Not that any provision in those docs actually required the lenders to help the company do that, and there is evidence to suggest they ought not. Per Fitch Ratings:
“‘Issuers that had undertaken LMTs prior to bankruptcy have exhibited lower recoveries for first-lien debt on a par-weighted basis relative to issuers who did not,’ said Joshua Clark, Senior Director. ‘The weighted average recovery for issuers that emerged or are expected to emerge in 2024 that conducted an LMT is 23%, compared to 53% for those who had not.’”
A disastrous ~57% deduct, but one the company thinks lenders ought to be forced into. Think about US consumers!! From the complaint:
“If borrowers do not believe their contracts are enforceable because a cooperative might form to renege on them, they will be less willing to enter the Leveraged-Finance Market at all – thereby depressing demand for lenders’ capital.
Ultimately, all these restrictions harm U.S. consumers. The Cooperative introduces inefficiencies in the Leveraged-Finance Market and the Market for Outstanding Optimum Debt, creating a deadweight loss that consumers bear when debt becomes more expensive and companies increasingly struggle to attract the capital they need to operate efficiently.”
Rich. A.F. Because, if there is one thing we’re 1,000% certain of, it is that any LME would have stripped defaults, covenants … really, any and all possible protections of the left-behind group on the way out the door. Apparently that ain’t a renege! And, if history is any indicator, the company would just limp along in a zombie-like state till it filed chapter 11, give or take, a year later. What a win for US consumers.
Paired with Selecta, it kinda seems like big lenders are damned if you do, damned if you don’t at the moment. As Bloomberg’s Matt Levine aptly put it:
“If lenders get together to stop creditor-on-creditor violence, or to commit it, either way there is some antitrust risk.”
We are looking forward to the clarity the litigation provides and will circle back after the defendants chime in.
*Per the complaint, the defendants are represented by Akin Gump Strauss Hauer & Feld LLP as legal counsel and PJT Partners LP as financial advisor.
**We took some liberties. Like we said, the complaint is ninety-one pages long.
***The same argument was raised in Selecta. We continue to believe marginally incentivizing consolidation into a single entity, which seems like a natural outcome, is stupid. If that were the case, would the company then sue to force that lender to sell and deconsolidate its holdings so the borrower could pursue a LME across more lenders? We can’t wait to see that complaint.
****Although it was difficult, 😢, to disagree with the sentiment shared by Ms. Selendy here:
“I think overwhelmingly, the folks who lend to private equity are just appalled by the bankruptcy process, number one, and the costs of bankruptcy. They really have, in many cases, are just gobsmacked by it, and they want to avoid it at all costs.”
⏩One to Watch: Teads Holding Co. ⏩
NYC-based Outbrain Inc. (“Outbrain”) was “… a leading technology platform that drives business results by connecting media owners and advertisers with engaged audiences to drive business outcomes …,” which is a nice way of saying it fed you the weird-a$$ ads you see on across the Internet. What Outbrain called the “open web.” Garbage that looks like this:
We’ve all seen ‘em, but Johnny didn’t really think anyone was dumb enough to click. Apparently enough suckers did that Outbrain went public in July ‘21 at $20/share … although the price cratered pretty much immediately.
The stock hovered just below the $5 mark until just before ‘25, when it benefited from a bump driven by Outbrain’s announcing it would acquire, in an unholy merger of equals, Luxembourg-based, Altice-owned Teads, a “… global omnichannel video platform” aka video ads.
Whoa, whoa, slow down, Satan.
The sinful combo would create “… one of the largest open internet advertising platforms, differentiated by its ability to drive outcomes for awareness, consideration, and performance objectives — across CTV, web and mobile apps.”
Shareholders approved the deal in December ‘24, and on February 3, 2025, the transaction closed, with (i) Outbrain paying ~$900mm — $625mm cash, the rest stock and (ii) the combo-co (collectively, the “company”) donning the Teads name and, as of June 6, 2025, the new ticker $TEAD.
The same day the deal closed, the company got to work on capturing synergies between the businesses by announcing a restructuring plan that cut costs and streamlined operations, which is a nice euphemism for, among other things, letting ~15% of the workforce know they’d be going home permanently either immediately or, best case scenario, within a year. Though, between the option of that outcome or continuing in the 85%, we know how we’d walk into that soul-crushing-company meeting:
In any event, things then hummed along, and on May 9, 2025, we got to see the first glimpse into the company’s future when it released 1Q25 results. But the quarter’s figures weren’t terribly helpful because, naturally, it had been a jumbled mix of pre-closing and post-closing ops … that CEO David Kostman lobbed into a single reporting segment. Thanks, 🖕, Dave.
Regardless, projections painted a picture of where management expected to land over the remainder of the year:*
“The following forward-looking statements reflect our expectations for the second quarter and full year of 2025.
For the second quarter ending June 30, 2025, we expect:
Ex-TAC gross profit of $141 million to $150 million
Adjusted EBITDA of $26 million to $34 million
For the full year ending December 31, 2025, we continue to expect:
Adjusted EBITDA of at least $180 million”
Okay, with the bar set, let’s see how that compared to where it all landed.
On August 7, 2025, the company issued a press release for its 2Q25 results aaaaannnd, well, there’s not much to mock quite yet. Everything fell within the guidance ☝️.
A sense of caution, however, was in the air regarding future performance. From the announcement:
“For the third quarter ending September 30, 2025, we expect:
• Ex-TAC gross profit of $133 million to $143 million
• Adjusted EBITDA of $21 million to $29 million
For the full year, the Company expects to generate positive Free Cash Flow.
Considering that Q4 historically contributes nearly ~50% of annual Adjusted EBITDA for the combined business, and the unusually wide range of outcomes the Company currently sees for Q4 due to the impact of the post-merger integration, the Company made the decision not to reaffirm FY 2025 Adjusted EBITDA guidance.” (emphasis added)
Which, sure, it’s not an outright withdrawal, but choosing not to reaffirm ain’t exactly a sign of good things to come.
⚡Spoiler alert:⚡ good things did not come.
The company announced its 3Q25 results on November 6, 2025, and the quarter was a straight up miss. Ex-TAC gross profit landed at $130.5mm (~1.9% below the range’s low end) and adjusted EBITDA $19mm (~9.5% lower than expected).
Not earth-shatteringly bad though. Year-end expectations are another story.
That’s where all hope was lost. Recall that the company had predicted, as recently as six months earlier, in May ‘25, that adjusted EBITDA for the year would be “… at least $180 million.” These were the 4Q25 projections:
“For the fourth quarter ending December 31, 2025, we expect:
• Ex-TAC gross profit of $142 million to $152 million
• Adjusted EBITDA of $26 million to $36 million”
With three quarters of results, even Johnny was able to do the math:
The company still, LOL, didn’t formally withdraw its guidance. Not that it really needed to; the market reaction was swift and brutal …
… before it popped 20% yesterday …
… on the news that the company had decided to ax another lucky 10% of its workforce.
Damn, investors are savage. Still, it’s peanuts; zoom out and ~90% of the stock’s value has evaporated YTD …
… and the company’s market cap now sits at ~$67mm. But we hope shareholders rejoiced over the slight recovery.
As of September 30, the company had ~$621.6mm in debt outstanding (after giving effect to discounts and amort), composed of $604mm in senior secured notes due February ‘30 and $17.6mm under a short-term revolver available to fund its French operations, each incurred in connection with the merger, so it’s not surprising that, pretty soon after the company spilled the beans on 3Q results and 4Q guidance, the downgrades started.
In late November ‘25, Fitch Ratings dropped the company from BB- to CCC+ and S&P Global pushed it from BB+ to BB-. In line with those ratings, per FINRA, the senior secured notes last priced at 39c on the dollar.
Operationally, part of the problem seems to be that the kids just ain’t reading ads like they used it. Per S&P:
“… operational issues include … declining page views on premium publishers partly due to increased adoption of AI summaries …”
The company seems like an eventual resident of chapter 11, but it still has time to surprise us and figure out how to get AI to click its “offerings,” reporting ~$138mm in cash and expecting adjusted free cash flow to, for real this time 😉, break even in ‘26. Plus, it has access to an as-of-yet undrawn $100mm revolver. Though, whenever it taps into that, the company will have to tread carefully: the revolver has a springing 3.1:1 consolidated net senior secured leverage covenant, tested on the last day of each quarter, once draws exceed 40% of commitments.
*“Ex-TAC gross profit” adds back in traffic acquisition costs, which are payments made by the company to folks who embed their ads.
📚Resources📚
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. 💥You can find it here💥.
📤 Notice📤
Katie Catanese (Partner) joined Squire Patton Boggs from Foley & Lardner LLP.
🍾Congratulations to…🍾
Michael Colarossi on his promotion to Partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Kyle Satterfield on his promotion to Partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Kelley Drye & Warren LLP (Eric Wilson, Jason Adams, Maeghan McLoughlin, Richard Gage) and Cole Schotz PC (Justin Alberto, Stacy Newman, Carol Thompson, Sarah Carnes, Seth Van Aalten) for securing the legal mandate on behalf of the official committee of unsecured creditors in the American Signature Inc. chapter 11 bankruptcy cases.
Portage Point Partners (Robert Albergotti, Adam Waldman) for securing the financial advisor and investment banking mandates on behalf of the official committee of unsecured creditors in the PrimaLend Capital Partners, LP chapter 11 bankruptcy cases.
Seward & Kissel LLP (Robert Gayda, Catherine LoTempio, Andrew Matott) and Morris James LLP (Eric Monzo, Siena Cerra) for securing the legal mandate on behalf of the official committee of unsecured creditors in the Hudson 1701/1706, LLC chapter 11 bankruptcy cases.
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If the Lenders CO-Op limits the ability of each member to transfer ownership and resultant liquidity, would not the accountants require some markdown of the assets on the creditor’s books?