Tao Tsuot Ltd. (TASE: TAO-M), the investment house controlled by Ilan Ben-Dov, is reconsidering its offer for a debt settlement for its bondholders, in the wake of the market climate and the plunge in the share price of Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), which is also controlled by Ben-Dov.
Partner's share price fell 14.9% on Nasdaq yesterday to $10.15, giving a market cap of $1.58 billion, after falling 8.9% on the TASE. Partner's share price fell a further 4.1% in early trading today to NIS 36.82. Yesterday, the company published a weak financial report, which included a 30% drop in net profit, said that it expects worst to come, and announced that it would not distribute a dividend.
The share price of Partner's direct parent company Scailex Corporation (TASE: SCIX; Pink Sheets:SCIXF) fell 14.9% on Nasdaq yesterday to $8.60, giving a market cap of $742 million, after falling 15.1% on the TASE, and a further 6.2% in morning trading today to NIS 29.50. Its direct parent, Suny Electronics Ltd. (TASE: SUNY), through which Ben-Dov controls Partner, fell 22% in the past two days, and was unchanged at NIS 20.35 this morning.
In a notice to the TASE after the market closed yesterday, Tao said, "Members of the audit committee and board of directors asked experts for an opinion about the recent events in the capital market, including the sharp drops in the share prices of Suny, the subject of the offer, and their effect on the offer."
Tao is on the TASE's restricted list; there is no trading in the share after the opening of the market. Its share price fell 5.3% at the opening today to NIS 0.09, giving a market cap of NIS 29 million. Its share price has fallen 63% since the beginning of the year, and its bond price has fallen 78%.
Last month, Ben-Dov offered Tao's bondholders to convert NIS 423 million in debt into a 24% holding in Tao. In exchange, he would transfer 50% of Suny to Tao, so that the bondholders would benefit from Partner's share performance and dividends. Capital market sources estimated that the offer amounted to a 50-70% loss of value for the bondholders.
In a separate notice to the TASE, Tao said, "Due to the sharp drops in the securities that constitute the credit guarantees of the fully-owned subsidiary's holding to a financial corporation, a breach of the financial covenants has resulted with regard to the value of these guarantees… The subsidiary currently owes the financial corporation NIS 16.5 million, which is due to repaid in August 2011."
Published by Globes [online], Israel business news - www.globes-online.com - on August 11, 2011
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