Select Communications Ltd., headed by Michael Gelfand, is in talks with institutional investors for guarantees. The company will apparently try to raise capital from institutional investors for one of the banks, which will provide the guarantee for the company. Only bank guarantees are valid under the terms of the mobile carrier tender, and institutional investors cannot directly provide them.
Select Communications is feverishly trying to close a deal, but is highly unlikely to do so, because of the lack of time - the guarantees must be submitted to the tenders committee by Friday.
Select Communications has also reportedly met with insurance companies; in short, it is seeking every option for securing the financing because Israel's banks are barred from, or refuse to, participate in Select's mobile venture after winning the tender.
Select Communications knows that there is no chance that the tenders committee will agree to deviate from its custom and allow guarantees from a foreign bank, hence the company's efforts to cut a deal with institutional investors to provide guarantees to the banks, which will provide the guarantees to the company.
Select Communications needs NIS 700 million in guarantees, and it also needs financing to set up its network - it will new more than NIS 1 billion altogether. Given the difficulties in securing the guarantees, the company's shareholders have greatly increased the shareholders' equity that plan to inject in the venture. They reportedly provided NIS 400 million, but this was not enough for the banks.
Published by Globes [online], Israel business news - www.globes-online.com - on July 11, 2011
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