B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM) reported this morning that it plans to offer eight million shares in order to improve its financial position.
The equity offering comes in the wake of the substantial decline in the share price of B Communications subsidiary Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), leading to soaring yields on B Communications' bonds, and the uncertainty over the sale of Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD) of its holding in B Communications. The offering is intended to raise NIS 150 million.
Assuming that it goes according to plan, after the offering B Communications will have sufficient liquidity to service its debt until the end of 2021. In other words, B Communications is ensuring itself a cushion in the event that Bezeq does not distribute dividends in 2019-2020. It Is not clear whether Internet Gold will participate in the offering. This will partly depend on the stance of Internet Gold's bondholders.
Even if Internet Gold does not participate, its holding in B Communications will be diluted only to 51%, so that it will still have control, and will therefore be able to continue negotiations with the Searchlight Capital Partners and York private equity funds on selling its holding.
Late on Thursday, it was reported that Searchlight had offered to buy control of B Communications from Internet Gold for NIS 400 million. Searchlight was due to make a binding offer in the middle of last week together with York Capital Management, but the negotiations broke down, which left Internet Gold unable to meet its obligations to its bondholders, so that in effect it passed to their control. A meeting of the bondholders took place on Thursday evening, but even before it had ended it emerged that Searchlight had returned to the negotiations.
The offer is subject to several conditions, among them the grant of a permit by the Ministry of Communications, completion of a due diligence examination at Bezeq, and refinancing of B Communications' short-term debt.
Searchlight says that it is willing to buy between 50.01% and 65% of B Communications from Internet Gold, and that it expects a response by January 22. It says that it is prepared to reach a binding agreement within the following ten days. Searchlight also says that it has an Israeli partner, and a high level of certainty that it will obtain the necessary permit from the Ministry of Communications. Searchlight is also demanding representation on the Bezeq board of directors.
Published by Globes, Israel business news - en.globes.co.il - on January 20, 2019
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