Elco close to buying Golan Telecom

Patrick Pariente photo: Eyal Izhar

Golan Telecom shareholder Patrick Pariente is due in Israel to finalize the agreement. 

Elco Holdings Ltd. (TASE: ELCO) is close to buying Golan Telecom. As far is known, Golan Telecom shareholder Patrick Pariente is due to arrive in Israel from France shortly to finalize the negotiations. Golan Telecom is not currently negotiating with any other potential buyer, and it and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) are thought to be about to ask the court today for a 48-hour extension in order to complete negotiations between them.

As reported by "Globes", Elco came back into the picture after withdrawing from negotiations a month ago because of Golan Telecom's demands and its refusal to disclose full details of its position. Elco returned to talks after receiving the message that its requirements were negotiable and after it was given to understand that Cellcom would also show flexibility. The price in the deal is estimated at about NIS 350 million, and the deal includes a long term agreement for unification of networks with Cellcom, via which Cellcom will be compensated for Golan Telecom's debt to it.

Last week, Cellcom filed an application for liquidation of Golan Telecom because of the debt. Golan Telecom has not been paying the full amounts that Cellcom has been charging it, this in addition to a debt of NIS 600 million. For its part, Golan Telecom denies the debt, and a month ago it asked the court to recognize its position.

The liquidation petition is due to be heard today. Cellcom is taking an approach of "let justice be done though the skies fall": either Golan Telecom's shareholders sell the company to Elco, or Cellcom will do all in its power to have Golan Telecom liquidated.

Cellcom's preference is for Golan Telecom to be sold as a going concern, but it realizes that liquidation is not necessarily a bad option from its point of view. Cellcom has prepared a plan of action in the event of liquidation with the aim of recruiting as many subscribers as possible.

Meanwhile, Golan Telecom creditor Mizrahi Tefahot Bank (TASE:MZTF) announced yesterday that it opposed liquidation. The bank says that there is a commercial dispute between Cellcom and Golan telecom and that this should be clarified through a normal civil action and not through liquidation. Mizrahi Tefahot points out that it has first lien on all Golan Telecom's assets, while Cellcom is an unsecured creditor, so that it is doubtful whether Cellcom will benefit from any proceeds of a liquidation, raising apparent questions about its bona fides in filing the liquidation petition.

Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Patrick Pariente photo: Eyal Izhar
Patrick Pariente photo: Eyal Izhar
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