"Globes" has learned that Gad Zeevi recently approached a small number of institutional bodies (provident and pension funds and insurance companies) to participate in a private placement totaling $250 million in bonds.
The institutional bodies were approached through brokerage firm IBI. The amount raised by Zeevi Holdings, fully owned by Gad Zeevi will serve as a substitute for the bank credit Zeevi used last year to purchase his holdings in Bezeq (20%).
At the end of October 1999, Zeevi acquired the shares of British company Cable & Wireless in Bezeq for $630 million in cash, at NIS 17.6 per share. Most of the acquisition was funded through credit Zeevi received from five banks: Bank Hapoalim, Bank Leumi, the First International Bank, United Mizrahi Bank and Discount Bank.
The loan terms allow for early redemption. Through the current move, Zeevi plans to exploit this possibility and repay part of the loans in order to "re-finance" under better terms. This is against the backdrop of the Bezeq share price on the stock market of NIS 17.6 per share, against the share price on lien to the banks, which is currently NIS 24.5 per share.
The move will enable Zeevi to release some of the equity he used in the acquisition, as part of his preparations to bid for the controlling interest in Bezeq.
The terms of the private placement, contingent upon agreement between Zeevi and the banks, state that the bonds will be issued for a two-year period at prime minus 0.1% interest rate. The interest will be debited every quarter, payable at the end of the loan period. About 80% of the sum raised in bonds will be guaranteed by a lien on Bezeq shares, while the remainder will be against bank guarantee.
Zeevi will have the right to early repayment every quarter. Financing bodies will have the option of acquiring lien shares at a discount on the privatization of Bezeq or on the loan redemption date, which comes first.
Published by Israel's Business Arena on 27 August, 2000