With ten days to the deadline, Select Communications is having trouble obtaining bank financing to set up a cellular network. The company is in talks with Israel's three largest banks Bank Leumi (TASE: LUMI), Bank Hapoalim (TASE: POLI) and Israel Discount Bank (TASE: DSCT) to receive NIS 700 million in guarantees plus financing for the cellular network, which will bring the sum needed to more than NIS 1 billion.
Each of the banks has its own reason for making difficulties over the financing. Select, owned by Michael Gelfand and Louis Mayberg, must present the guarantees to the Ministry of Communications tenders committee by July 15, and as things stand now, the task looks very difficult.
Select Communications was only awarded the tender after Hezi Bezalel, who initially won the tender, did not succeed in obtaining the money on time.
The belief in the banking system is that Select Communications does have high equity that it could deposit against the guarantees but the banks are still raising difficulties.
Leumi was party to financing Ilan Ben Dov's acquisition of cellular operator Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and fears too high an exposure to the telecom sector. Similarly, Hapoalim is financing Patrick Drahi and HOT Telecommunication Systems Ltd. (TASE: HOT) and supporting the Mirs deal with $180 million. Discount Bank could finance the deal but following Bezalel's failure, the belief is that the banking system has no enthusiasm for such an adventure after being burnt once.
If Select Communications fails in its mission, the tender would be awarded to Golan Communications, which only bid NIS 400 million.
Published by Globes, Israel business news - www.globes-online.com - on July 5, 2011
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