Curreen Capital Partners, LP on Optimum Communications
Thesis
Curreen purchased Optimum as a short-duration tender-offer special situation rather than as a conventional long-term investment. The company offered to repurchase roughly 40% of its shares at $2.50, far above both the pre-announcement price and the fund's approximately $1.13 purchase price. Curreen believed controlling shareholder Patrick Drahi had both the means and incentive to complete the transaction because increasing his ownership would strengthen his position in negotiations with lenders. The structure provided substantial downside protection because profits on accepted shares could offset a weak exit price on shares not accepted in the tender. The position ultimately worked as intended and was fully exited after the tender.
“Overall, the tender offer appeared to offer downside protection, with the potential for us to make a profit.”
Key risks
- Optimum was heavily indebted and appeared headed toward financial restructuring.
- Returns depended on completion and allocation of the tender offer.
- Shares not accepted in the tender could have traded at a substantially lower price.