Haim Saban announced today that he is giving up control of Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). The upshot is that Hutchison will take control of the company.
A few weeks ago, Saban, the controlling shareholder in Israeli telecommunications company Partner, reported that his talks with Hutchison on recycling a loan had ended without result, and that Hutchison was in effect given the possibility of taking control of the company again. Today, Saban's S.B. Israel Telecom Ltd., which holds 30.38% of the shares in Partner, issued an Event of Default notice, stating that it would not be able to repay debt falling due on January 29, 2020. The notice states that "For the sake of good order, on November 8, 2019, S.B. Israel notified The Ministry of Communications of Israel of the Default Notice and that such Default Notice may result in the filing of an application to appoint a receiver over the Ordinary Shares pledged by S.B. Israel to Advent to secure the Reporting Persons’ obligations arising under the Notes."
Hutchison, through Advent, now needs to apply to the court for the appointment of a receiver, since the shares are mortgaged to it. During the receivership, Hutchison will try to obtain a permit to control Partner. If no permit is forthcoming from the Ministry of Communications, the shares will be sold.
Saban owes Hutchison $300 million (NIS 1.1 billion) to Hutchison, which controlled Partner in the past, while the market value of the shares securing the loan is NIS 737 million. Saban inherited the debt when he bought control of Partner in 2013 from Ilan Ben-Dov. Saban bought 30.7% of Partner from Ben-Dov's Scailex for NIS 250 million, and another 2% from Bank Leumi (TASE: LUMI) for NIS 83 million. He later invested further sums, and is now about NIS 500 million down on the investment in Partner.
Saban said today through a spokesperson, "We invested in Partner with the aim of turning into the most advance communications group in Israel. Today, Partner provided the highest quality mobile telephony, the most innovative multi-channel television, and leads in deploying fiber-optic infrastructure throughout Israel. All this is despite all the difficulties, the substantial failures, and the regulatory obstacles in the way. The Saban group bears the loss that it has incurred alone, with no involvement of any financial institution or the public in Israel."
Saban said that his philanthropic activity in Israel would continue unabated, and that the activity of venture capital firm Saban Ventures, which invests in technology companies in Israel, would be expanded.
Last week, representatives of Hong Kong-based Hutchison came to Israel for meetings at the Ministry of Communications in anticipation of the return of control of Partner. Hutchison is also active in Israel in water desalination, a business managed by former Partner CEO Amikam Cohen.
Published by Globes, Israel business news - en.globes.co.il - on November 10, 2019
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