Activist investment fund Elliott Associates L.P. has revealed a 4.8% stake in Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), and is demanding the resignation of the company's directors who are under investigation. The fund wrote to Bezeq chairman David Granot calling on him to carry out changes in the board. "We believe that the Bezeq board, in its current composition, is no longer fit for its purpose. Several directors are under investigation for severely inappropriate financial behavior in Bezeq and/or are connected to Eurocom, which is involved in legal proceedings brought against it by its creditors.
Elliott Associates is demanding the immediate resignation of all directors under suspicion in investigations by the Israel Securities Authority and/or connected to Eurocom. It is also demanding that these directors should be replaced by independent, professional directors to be selected from a list of candidates proposed by a special committee of the board, after consultation with Bezeq's main shareholders, and to be approved by a vote of the shareholders at the earliest opportunity.
Bezeq controlling shareholder Shaul Elovitch is probably about to lose control of the company, and Eurocom, through which he indirectly controls Bezeq, has asked for court approval of an arrangement with its creditors whereby Naty Saidoff will acquire control of that company.
Commenting on the possibility of a transfer of control, Elliott Associates writes, "In the event of change in ultimate control of Bezeq, the directors appointed by the new controlling shareholder should be chosen on the basis of their relevant experience in businesses of this order of size, and their proven clean reputations. Before these new directors are appointed, consultation should take place on their identities with Bezeq's main shareholders, and they should be approved by the relevant shareholders' meeting."
The firm adds: "As you know, Bezeq faces attractive opportunities and significant challenges. The time that goes by without stable and uncompromised ownership and governance is to the detriment of all stakeholders. For that reason we earnestly ask you to institute corporate governance worthy of Bezeq and its stakeholders - that is, a board of directors in which there is the right combination of expertise, independence and integrity, for the sake of the future. We sincerely hope that these concerns of ours will receive swift attention during the coming weeks. Meanwhile we are ready to take all steps reserved for Bezeq shareholders in order to protect our interests, and we welcome any question you or the board members may have."
Elliott Associates L.P. is a veteran New York-based hedge fund founded and managed by Paul Elliott Singer and known for its investor activism. Singer, incidentally, is also known as a philanthropist who contributes to Jewish and pro-Israeli causes and to the gay community. According to the firm's figures, the fund achieved a 14% return in 2016 and a 7% return in the first nine months of 2017.
Bezeq's share price is currently up by more than 5% on the Tel Aviv Stock Exchange.
Published by Globes [online], Israel business news - www.globes-online.com - on January 16, 2018
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