Bank Hapoalim has asked Shamrock Holdings of California for extra collateral on a loan the US investment firm used to buy 50% of Pele-Phone, Israel’s third largest mobile phone operator. Shamrock has rejected the request, saying it is not obligated under the loan agreement to provide extra guarantees.
Dr. Avraham Ortal Adv., who along with Michael Zellermayer Adv. of the Zellermayer, Pelossof & Co. law firm represents Shamrock in its Israel deals, confirmed the report and told “Globes” that “the bank requested extra guarantees.”
Ortal continued, “We said that under the loan agreement, nothing has changed that forces us to do so. It was clear from the outset that this is a financial deal, in which we share the risk and the reward.”
Ortal’s comments effectively confirm, for the first time, the existence of a rift between Shamrock and Hapoalim, in the wake of the loan and the fall in the value of Pele-Phone since the deal closed.
Shamrock bought its 50% stake in Pele-Phone from Motorola at the start of 2001 for $590 million. To pay for the stake, Shamrock received senior financing totaling $380 million (including interest) from Bank Hapoalim and another $240 million in subordinated financing from Bezeq.
Michael Geiger, who runs Shamrock’s Israel operations, told “Globes” that he had no problems working with Bank Hapoalim.
“We’re obligated to repay the loan in two years’ time. We still think its possible to profit from the deal as the market recovers and Pele-Phone’s results improve,” Geiger said.
Shamrock, the investment arm of Roy Disney, recently established a fund along with several other investors including GE (NYSE: GE) and Haim Saban. Last year, Saban joined forces with Shamrock to bid for the government’s controlling stake in Bezeq. The fund has raised $170 million for investments in media and communications, with $50 million earmarked for Israel.
The fund will begin investing “in the very near term,” Geiger said. “We also decided to raise money for a $100 million fund that will operate only in Israel, from the beginning of next year.”
Published by Globes [online] - www.globes.co.il - on 7 August, 2003